BNZ INVESTMENT SERVICES LIMITED PROSPECTUS BNZ KIWISAVER SCHEME

Transcription

1 BNZ INVESTMENT SERVICES LIMITED PROSPECTUS BNZ KIWISAVER SCHEME DATED 17 September /

2 CONTENTS DESCRIPTION OF OF SCHEME MANAGERS AND PROMOTERS REGISTRAR, AUDITORS, ADVISERS AND EXPERTS INDEPENDENCE OF OF KIWISAVER TRUSTEE AND CUSTODIAN KIWISAVER TRUSTEE DESCRIPTION OF OF SCHEME AND ITS ITS DEVELOPMENT SUMMARY OF OF FINANCIAL STATEMENTS GUARANTORS ACQUISITION OF OF BUSINESS OR OR EQUITY SECURITIES INTERESTED PERSONS MATERIAL CONTRACTS PENDING PROCEEDINGS OTHER TERMS OF OF OFFER AND SCHEME FINANCIAL STATEMENTS AND AUDITOR S REPORT PLACES OF OF INSPECTION OF OF DOCUMENTS OTHER MATERIAL MATTERS Risks Tax Returns/Unit Prices MANAGER'S STATEMENT KIWISAVER TRUSTEE'S STATEMENT DIRECTORY GLOSSARY APPENDIX A. A. SUMMARY FINANCIAL STATEMENTS APPENDIX B. B. AUDITOR S REPORT - - SUMMARY FINANCIAL STATEMENTS /

3 THE BNZ KIWISAVER SCHEME PROSPECTUS This Prospectus relates to the BNZ KiwiSaver Scheme.* A copy of this Prospectus has been delivered to the Registrar of Financial Service Providers for registration under section 42 of the Securities Act The specified date of this Prospectus is 17 September 2015, which is the date it was delivered in registrable form to the Registrar of Financial Service Providers for registration. This Prospectus has been prepared in compliance with Schedule 5A to the Securities Regulations. For the purposes of clause 6(3) of Schedule 4 to the Financial Markets Conduct Act 2013, we have elected for the Securities Act 1978 to apply to the offer of interests in BNZ KiwiSaver. This election can continue to apply up until 1 December 2016, but we may elect to apply the Financial Markets Conduct Act 2013 to the offer of interests in BNZ KiwiSaver prior to that date by notifying the Financial Markets Authority and the Registrar of Financial Service Providers. General In this Prospectus we, our, us, Manager and Issuer means BNZ Investment Services Limited. You, your, I and member means the person who signs up or is allocated to BNZ KiwiSaver. All terms defined in the Trust Deed which are not separately defined in this Prospectus shall have the same meanings where used in this Prospectus, unless the context otherwise requires. Units not deposits or other liabilities and not guaranteed Investments made in BNZ KiwiSaver do not represent deposits or other liabilities of Bank of New Zealand ( BNZ ) or any other member of the National Australia Bank Limited group, and are subject to investment risk, including the possible loss of income and principal invested. None of BNZ, or any other member of the National Australia Bank Limited group, the Trustee, any director of any of them, the Crown or any other person guarantees (either fully or in part) the performance or returns of BNZ KiwiSaver or the repayment of capital. National Australia Bank Limited, the ultimate parent of BNZ, is not a registered bank in New Zealand, but it is a licensed bank in Australia and is therefore subject to the supervision of the Australian Prudential Regulation Authority. There is no Crown guarantee in respect of any KiwiSaver scheme or investment product of a KiwiSaver scheme. * The term BNZ KiwiSaver may be used in this Prospectus as an abbreviation for the BNZ KiwiSaver Scheme and readers should view those terms interchangeably /

4 Key Information KiwiSaver General Overview Page What is KiwiSaver? Who can join? Why have I been automatically enrolled? How much do I have to contribute? What are the benefits? KiwiSaver is a voluntary savings initiative set up by the Government to encourage New Zealanders to save for their retirement. KiwiSaver schemes are established under a framework set out in legislation. The Government and your employer may also contribute to your KiwiSaver account. You don t have to be employed to join a KiwiSaver scheme, but you do have to be: a New Zealand citizen, or entitled to live in New Zealand permanently; living or normally living in New Zealand unless you are a state sector employee serving outside New Zealand; and under the age of eligibility for New Zealand Superannuation (currently age 65) when you first become a KiwiSaver member. If you are joining the BNZ KiwiSaver Scheme by transferring from another KiwiSaver scheme, you are able to join the BNZ KiwiSaver Scheme even if you are over the qualifying age for New Zealand Superannuation. When you start a new job with a new employer, if you're not already a member of a KiwiSaver scheme and are eligible, your employer will automatically enrol you in KiwiSaver. If this happens, Inland Revenue will provisionally allocate you to your employer's chosen KiwiSaver scheme (if they have one) or otherwise to a default KiwiSaver scheme. You may have been allocated to the BNZ KiwiSaver Scheme by Inland Revenue for either of these reasons. You will still have the option to choose a KiwiSaver scheme. You can opt out of KiwiSaver between the end of weeks two and eight of your new employment if you are automatically enrolled. If you're employed, you need to contribute either 3%, 4% or 8% of your before-tax pay to your KiwiSaver account. Your contributions will be deducted from your takehome pay. If you don t choose a contribution rate, your employer will deduct contributions at the minimum contribution rate of 3%. You can change your contribution rate, as well as make regular or lump sum contributions at any time. You can take a contributions holiday at certain times. If you're self-employed or not working, the minimum amount that you must contribute is set by your KiwiSaver scheme provider. BNZ KiwiSaver has no minimum amount that you have to contribute, however we may close your KiwiSaver account where it has a nil balance, provided we give you notice. You can easily set up bill payments or a direct debit authority to make regular or lump sum contributions to your BNZ KiwiSaver Scheme account. While you are over 18 and below your Qualifying Age and if you are contributing to KiwiSaver through your pay, your employer will generally also contribute 3% of your before-tax pay. Your Qualifying Age is the date when you reach the age of eligibility for New Zealand Superannuation (currently age 65) and you have been a KiwiSaver member (and/or a member of a Complying Superannuation Fund) for at least five years. Employer contributions are taxed before they are credited to your KiwiSaver account. If you are eligible, the Government pays into your KiwiSaver account a Member Tax Credit of 50 cents for every dollar you contribute, up to a maximum of $ each year (1 July to 30 June). You need to be over 18 and below your Qualifying Age (and meet the residency requirements) to be eligible for Member Tax Credits. Your employer may not have to make KiwiSaver contributions if they make contributions to another superannuation scheme for you, and certain conditions /

5 When can I withdraw my KiwiSaver savings? apply. Your employer will be able to confirm if they do not have to make KiwiSaver contributions for you. Generally, you won't be able to withdraw your KiwiSaver savings until you reach your Qualifying Age. Once eligible, you can withdraw all or part of your KiwiSaver savings (certain withdrawal restrictions apply). In limited circumstances, you may also be able to withdraw all or part of your KiwiSaver savings early, including for the following reasons: - Buying your first home - Significant financial hardship - Serious illness - Permanent emigration In some cases, you can t withdraw your full account balance (see page 37 for details). If you permanently emigrate to Australia you cannot withdraw your KiwiSaver savings, unless you otherwise qualify for a withdrawal, for example due to serious illness. However, you can transfer your KiwiSaver savings to certain Australian complying superannuation schemes (see page 36 for details). If you die while you are a KiwiSaver member, your KiwiSaver savings will generally be paid to executors or administrators of your estate. 7, BNZ KiwiSaver Scheme Overview What is the BNZ KiwiSaver Scheme? Who provides the BNZ KiwiSaver Scheme? Where will my money be invested? The BNZ KiwiSaver Scheme is a registered KiwiSaver scheme under the KiwiSaver Act. The BNZ KiwiSaver Scheme is also a Government-appointed default KiwiSaver scheme. Issuer and Manager: BNZ Investment Services Limited Promoters: BNZ and its directors Trustee: The New Zealand Guardian Trust Company Limited Investment Adviser: Russell Investment Group Limited Administration Managers: BNZ and MMC Limited Registrar: Trustees Executors Limited The BNZ KiwiSaver Scheme has 6 funds for you to choose from: - Cash Fund: 100% income assets - First Home Buyer Fund: 85% income assets, 15% growth assets - Conservative Fund: 80% income assets, 20% growth assets (default fund) - Moderate Fund: 65% income assets, 35% growth assets - Balanced Fund: 50% income assets, 50% growth assets - Growth Fund: 30% income assets, 70% growth assets If you have been allocated to the BNZ KiwiSaver Scheme or did not choose a fund, then your contributions will be invested in the Conservative Fund until you tell us otherwise. Each fund has a different target mix of assets ( asset allocation ) that it invests in such as cash and fixed income investments (income assets) and shares (growth assets). You can choose to invest in just one fund, or spread your investment among several funds. We divide the value of each fund into equal parcels, called Units. The contributions you make, and other amounts paid to the BNZ KiwiSaver Scheme on your behalf, buy Units in the fund(s) you have selected. Each Unit has a price that reflects the value of the relevant fund's assets and liabilities (which are regularly revalued) and /

6 What are the risks and returns? What are the fees? Can I make additional regular or lump sum contributions? The key factor that determines returns is the investment performance of the fund(s) you invest in. Investment performance is influenced by the asset allocation of your selected fund(s), the performance of any investment manager and underlying investment managers, the fund s investments and the investment markets generally. Other key factors include the level of contributions made, the length of time you have been a member of the BNZ KiwiSaver Scheme, whether you have made any early withdrawals and the tax, fees and expenses charged. All investments involve an element of risk. Risk is the likelihood of losing money, or getting a lower investment return than you expect. In general terms, the more a fund has invested in growth assets, the greater the fluctuations in returns and long term growth potential. There are two types of fees: a member fee of $1.95 per month (or part month), paid directly from your BNZ KiwiSaver Scheme account. a management fee of up to 1.1% per annum that varies depending on the fund(s) that you invest in. This fee is paid from the fund(s) and is reflected in that fund's Unit Price. Certain expenses are paid by the funds. We and the Trustee are entitled to be reimbursed from the funds for all expenses, losses, costs or liabilities (and the costs of defending claims) incurred in managing or supervising BNZ KiwiSaver. However, reimbursements cannot be made if the loss arises out of wilful default, wilful breach of trust or breach of the standard of care or other duties imposed by law. Yes. It's easy to set up bill payments, or a direct debit authority, to make regular or lump sum contributions to your BNZ KiwiSaver Scheme account Can I change the BNZ KiwiSaver Scheme funds in which I invest? Yes, you can change funds within the BNZ KiwiSaver Scheme at any time, for free. 47 Can I change to another KiwiSaver scheme or provider? Are my KiwiSaver savings guaranteed? What information will I get? What if I belong to another KiwiSaver scheme? Who can I contact for further information? You can also change to a different KiwiSaver scheme or provider by contacting them directly. No, KiwiSaver savings are not guaranteed by any person or organisation, including the Government. If you use BNZ internet banking, you'll be able to check your BNZ KiwiSaver Scheme account balance at any time. You'll also receive an annual statement of your account, a tax certificate, and a copy of the BNZ KiwiSaver Scheme Annual Report (including summary financial statements). You can still join the BNZ KiwiSaver Scheme, but you can belong to only one KiwiSaver scheme at a time. When you join the BNZ KiwiSaver Scheme we will arrange the transfer of your KiwiSaver account balance from your previous KiwiSaver scheme provider. Call us on , us at [email protected] or visit your local BNZ store and and the investment statement for the BNZ KiwiSaver Scheme /

7 In this section, we briefly describe the BNZ KiwiSaver Scheme and what funds you can invest in. 1. DESCRIPTION OF SCHEME 1.1 Name of the scheme The name of the KiwiSaver scheme is the BNZ KiwiSaver Scheme. 1.2 Year and place of establishment of the scheme BNZ KiwiSaver was established by a Trust Deed dated 8 January 2013 in Auckland and was registered under the KiwiSaver Act 2006 (the KiwiSaver Act ) on 16 January Brief description of the BNZ KiwiSaver Scheme and the interests being offered BNZ KiwiSaver is designed to help you save for your retirement. The amount you receive when a benefit is payable is determined by the contributions made to BNZ KiwiSaver, the investment returns of the fund(s) you invest in, whether you ve made any early withdrawals, and the fees, tax, and expenses deducted from your investment. In most cases you won t be able to withdraw your KiwiSaver savings until you reach your Qualifying Age. In limited circumstances you may be able to withdraw all or part of your KiwiSaver savings sooner (see the Early withdrawals section beginning on page 33). As at the date of this Prospectus BNZ KiwiSaver is also a Government-appointed default KiwiSaver scheme. Enrolment In most cases, if you are: a New Zealand citizen or entitled to New Zealand permanent residency; living or normally living in New Zealand; and under the qualifying age for New Zealand Superannuation (currently age 65) and joining a KiwiSaver scheme for the first time, you will be able to join BNZ KiwiSaver. You can become a member of BNZ KiwiSaver if you: apply to us directly; opt into KiwiSaver through your employer (and are allocated to BNZ KiwiSaver because it is your employer s chosen KiwiSaver scheme or a default KiwiSaver scheme); or are automatically enrolled in KiwiSaver when you start a new job with a new employer (and are allocated to BNZ KiwiSaver because it is your employer s chosen KiwiSaver scheme or a default KiwiSaver scheme) /

8 If you are joining BNZ KiwiSaver by transferring from another KiwiSaver scheme, you are able to join BNZ KiwiSaver even if you are over the qualifying age for New Zealand Superannuation. You may be eligible to enrol in BNZ KiwiSaver if you re an employee of the State services (within the meaning of the State Sector Act 1988) serving outside New Zealand, employed on New Zealand terms and conditions and in a jurisdiction where offers of membership in BNZ KiwiSaver are lawful. You can be a member of only one KiwiSaver scheme at a time. If you choose to join BNZ KiwiSaver, you won t be able to opt out of KiwiSaver (the opt-out facility applies only to those automatically enrolled in a KiwiSaver scheme). Automatic enrolment and opting out You may have been provisionally allocated to BNZ KiwiSaver if you have been automatically enrolled in KiwiSaver. If you do not opt out of KiwiSaver or choose another KiwiSaver scheme, then you will become a member of BNZ KiwiSaver and you are deemed to have acknowledged and accepted the terms and conditions set out in section 6 of the application form. You can opt out between the end of weeks two and eight of your new employment. Investment funds BNZ KiwiSaver allows you to invest your contributions into one of the six available funds, or to spread your investment among several funds. The minimum allocation to any one fund is 5% of any contribution you make. Contributions are accepted from members and then collectively invested. The six available investment funds are: - Cash - First Home Buyer - Conservative (default) - Moderate - Balanced - Growth We will automatically invest your contributions in the Conservative Fund until you tell us otherwise if: you have been allocated to BNZ KiwiSaver because it is a default KiwiSaver scheme or your employer's chosen KiwiSaver scheme; or we haven t received your investment instructions; or your investment instructions are unclear. All funds were established on 28 January 2013, except the First Home Buyer Fund which was established on 16 September See pages 40 to 47 for the target asset allocations or benchmarks for each fund and for more detailed descriptions about the funds /

9 How is your investment calculated? Your investment is measured in Units in the fund(s) in which you invest. Your contributions buy Units in the fund(s) you have selected at what is known as a Unit Price. Each Unit represents a proportional interest in that fund s assets. As the investments made by the fund(s) rise or fall in value, so does the value of each individual Unit. This means that the value of your investment will fluctuate (up or down) based on the rise or fall in the value of the investments made by the fund. A Unit does not give you any entitlement to any specific assets owned by BNZ KiwiSaver or allocated to any fund. Unit Prices are generally declared each business day. The Unit Price for a fund is the price that you will pay (or receive) when each contribution is invested (or any withdrawals are made from your investment) in the fund. The Unit Price reflects both the capital growth and losses of the investments in a fund and any income earned less any fees, expenses or other liabilities (excluding any tax) of that fund. Occasionally, if there are large volumes of contributions relative to withdrawals, the Unit Price you pay may be adjusted to pass on some of the costs of investing those contributions, to ensure that members who are not buying Units are not impacted by those costs. See page 64 for details. Transfers from an Australian complying superannuation scheme You can transfer your superannuation savings from an Australian complying superannuation scheme to BNZ KiwiSaver if New Zealand is now your place of permanent residence. Savings transferred to your BNZ KiwiSaver account from an Australian complying superannuation scheme can be withdrawn once you reach the age of 60 and you also satisfy the retirement definition in Australian legislation. This definition requires you either to: have attained age 60 on or before the ending of your employment; or reasonably satisfy the Trustee that you intend never to again become employed on a full time or a part time basis. For more information on how to transfer your Australian complying superannuation scheme savings to BNZ KiwiSaver, please call us on If you transfer your Australian complying superannuation scheme savings to BNZ KiwiSaver, some of the terms and conditions of BNZ KiwiSaver (as described in this Prospectus and the investment statement for BNZ KiwiSaver) will not apply to the savings transferred. For example, Australian complying superannuation scheme savings cannot be withdrawn for a first home purchase. Your Australian complying superannuation scheme provider may charge a fee to transfer the savings. You should also consider any effects of currency conversion (including exchange rate fees) and any differences in the product terms, fees and tax treatment of the two schemes if you are considering transferring your superannuation savings from an Australian complying superannuation scheme. We recommend that you seek personalised tax and investment advice before transferring your Australian savings, including advice as to the risks, benefits and options available to you. Transfers from other New Zealand registered superannuation schemes It may be possible to transfer retirement savings held in other New Zealand registered superannuation schemes to BNZ KiwiSaver. If you transfer your retirement savings to BNZ KiwiSaver, your savings will be governed by the terms and conditions of BNZ KiwiSaver (as described in this Prospectus), and the terms and conditions of your previous scheme will no longer apply /

10 Transfers from non-australian foreign superannuation schemes Transfers to a KiwiSaver scheme from a foreign superannuation scheme (other than an Australian complying superannuation scheme) are treated as withdrawals from the foreign scheme and are potentially subject to New Zealand tax. They may also affect your student loan repayments and any income-tested benefits. You may apply to make a withdrawal from your BNZ KiwiSaver account to pay any New Zealand tax liability or additional student loan repayment obligation that arises as a result of you transferring to BNZ KiwiSaver from a non-australian foreign superannuation scheme. You will need to apply for the withdrawal within two years of the tax liability or student loan repayment obligations being assessed by Inland Revenue and provide certain information to us to support your withdrawal request. You should be aware that in some circumstances the withdrawal may trigger a foreign tax liability. We recommend that you seek personalised tax and investment advice before transferring your savings from a foreign superannuation scheme. Please note that neither us, nor any of the other parties involved in BNZ KiwiSaver, is responsible for any tax consequences arising from any transfer of foreign superannuation savings you make. Transfers including UK pension amounts If you have transferred UK pension money into another KiwiSaver scheme, you may incur UK tax if you transfer to BNZ KiwiSaver or another KiwiSaver scheme. If your KiwiSaver savings include UK pension sourced amounts, we strongly recommend you talk to your independent tax adviser when considering transferring your KiwiSaver savings. BNZ Authorised Financial Advisers For personalised advice about which fund is right for you we recommend that you contact a BNZ Authorised Financial Adviser. A disclosure statement required under the Financial Advisers Act 2008 is available, free of charge, from your BNZ Authorised Financial Adviser or on request by calling /

11 In this section, we describe the various persons involved in providing the BNZ KiwiSaver Scheme to you. 2. MANAGERS AND PROMOTERS 2.1 Manager The Manager of BNZ KiwiSaver is BNZ Investment Services Limited. It is also the Issuer of the membership interests in BNZ KiwiSaver for the purposes of the Securities Act We were incorporated in New Zealand under the Companies Act 1993 on 16 October We are a wholly owned subsidiary of BNZ (incorporated in New Zealand). National Australia Bank Limited, a licensed bank in Australia, is our ultimate parent. National Australia Bank Limited does not guarantee the interests in BNZ KiwiSaver. BNZ KiwiSaver is the only KiwiSaver scheme that we manage. As at the date of this Prospectus, we intend to apply for and obtain a managed investment scheme manager licence under the Financial Markets Conduct Act 2013, prior to the 1 December 2016 due date. A biography for each of our directors follows: Richard Morath (BA, Fellow of the Institute of Actuaries-London and Australia, Associate of the Securities Institute of Australia) Mr Morath is a non-executive director of the Manager. Mr Morath has over 40 years experience in life insurance, funds management, banking and financial planning. Mr Morath was appointed a director of the Manager in 2013 and is the current chairman of the Manager s board. Mr Morath is a non-executive director and chairman of the Advice & Licences Boards and all financial planning companies in the National Australia Bank Limited group in Australia. Mr Morath is also the chairman of National Australia Trustees, a director of JANA Investment Advisors Limited, a director of BNZ Life Insurance Limited, a director of ASX listed Platinum Capital Limited (and chair of that company s audit committee), and a director of ASX listed Wealth Defender Equities. Mr Morath was previously CEO MLC Retail Funds, CEO MLC Corporate Funds, Group Executive Lend Lease Corporation and chairman of Plum (the MLC group vehicle providing member services to the large corporate superannuation market). Shelley Ruha (BCom) Ms Ruha is an executive director of the Manager and Head of BNZ Partners. Ms Ruha became a member of the BNZ Executive Team in November 2011, after 22 years with BNZ. During her time at BNZ, Ms Ruha has amassed significant leadership experience in business banking, institutional banking, products, technology and operations. Ms Ruha was appointed a director of the Manager in 2012 and is chairperson of BNZ s Investment Review Committee. Christopher Reid (LLB) Mr Reid is an executive director of the Manager and the Chief General Counsel for BNZ. Mr Reid is a qualified lawyer with over 25 years' legal experience and leads BNZ's legal, regulatory and secretariat teams. Mr Reid was appointed a director of the Manager in /

12 Lee Hatton (BBS) Ms Hatton is currently Chief Executive (appointed April 2015) of UBank, an on-line banking division of National Australia Bank Limited (NAB) and was previously, General Manager Group Regulatory Strategy & Affairs at NAB. With over 15 years of banking experience in NZ, UK, USA and Australia, Ms Hatton has held a number of management and leadership roles across the financial services industry, having spent time in strategy, risk, retail and corporate banking. Ms Hatton was appointed a director of the Manager in Jacqueline Farman (BBS; Chartered Accountant) Ms Farman is Financial Controller for BNZ. Prior to that, Ms Farman was Head of BNZ Investment Services Limited. In that role, Ms Farman and her team focused on ensuring compliance with regulatory requirements for BNZ s managed funds, together with the management of third-party service providers for BNZ s managed funds. Ms Farman has over 20 years experience in the financial services industry, focused primarily on finance and compliance-related roles. Ms Farman was appointed a director of the Manager in January Directors are as at the date of this Prospectus and may change from time to time without prior notice to members. The current directors can be found on the Companies Office website at Investment Manager and Administration Managers As at the date of this Prospectus, there is no appointed third party investment manager for BNZ KiwiSaver. However, during the life of this Prospectus we are considering appointing Nikko Asset Management New Zealand Limited ( Nikko ) to manage BNZ KiwiSaver s investment in New Zealand cash. If the appointment is made or revoked, it will be published on and you can call us on for any updates on the appointment. We have appointed Russell Investment Group Limited ( Russell Investments ) as investment adviser, to provide strategic investment advice to us in relation to the investment management of BNZ KiwiSaver. This may include advice about the anticipated mix of investments for each of the funds, rebalancing the funds to that anticipated mix, how each investment class is invested and foreign currency hedging. The administration managers of BNZ KiwiSaver are MMC Limited ( MMC ) and BNZ. MMC provides certain administration services including accounting services for BNZ KiwiSaver. BNZ provides customer management and certain administrative functions in relation to BNZ KiwiSaver. 2.3 Promoters BNZ and its directors are each promoters of BNZ KiwiSaver (each a Promoter and together the Promoters ). The names and addresses of us and our directors, and the names of the directors of BNZ, are set out in the directory at page 68 of this Prospectus /

13 3. REGISTRAR, AUDITORS, ADVISERS AND EXPERTS 3.1 Registrar Trustees Executors Limited (the Registrar ) provides registry administration services for, and is the Registrar of, BNZ KiwiSaver. 3.2 Auditor We have engaged Ernst & Young as auditor of BNZ KiwiSaver (the Auditor ). The Auditor is a registered audit firm and the Auditor's audit partners are registered as licensed auditors under the Auditor Regulation Act The Auditor carries out other assignments for us and our related entities. These matters have not impaired the Auditor's independence as our auditor or the auditor of BNZ KiwiSaver. 3.3 Custodian The assets of BNZ KiwiSaver are held in the name of BNZ Investment Services Nominees Limited (the Custodian ), which is a subsidiary of the Trustee. 3.4 Other professional advisers The solicitors involved in the preparation of this Prospectus were Chapman Tripp. 3.5 Experts There are no experts named in this Prospectus. 4. INDEPENDENCE OF KIWISAVER TRUSTEE AND CUSTODIAN As at the date of this Prospectus, The New Zealand Guardian Trust Company Limited is the trustee of BNZ KiwiSaver (the Trustee ). The Trustee and the Custodian are independent of us, MMC, BNZ, the Promoters, Russell Investments, and Nikko, if appointed as an investment manager. 5. KIWISAVER TRUSTEE Trustee The New Zealand Guardian Trust Company Limited is the trustee of BNZ KiwiSaver. Its address and the names and addresses of its directors are set out in the directory on page 68 of this Prospectus. The Trustee was incorporated in New Zealand on 7 September 1982 under the Companies Act 1955 and was registered under the Companies Act 1993 on 23 April Its origins date back to The New Zealand Guardian Trust Company Limited is a wholly owned subsidiary of Complectus Limited. The Trustee s ultimate holding company is Bath Street Capital Limited (previously known as Perpetual Guardian Holding Company Limited), a company incorporated in New Zealand. As at the date of this Prospectus, the Trustee holds a licence to act as trustee for a range of financial products, including BNZ KiwiSaver, under the Financial Markets Supervisors Act 2011 (the FMS Act ) for a term expiring on 16 March /

14 In granting the licence, the Financial Markets Authority has imposed a condition that the Trustee must certify in its six-monthly reports to the Financial Markets Authority under section 25 of the FMS Act that: it has sufficient financial resources and independence to support and develop its trustee and statutory supervisor business; and it holds adequate professional indemnity insurance for its trustee and statutory supervisor business. If the Trustee is held personally liable to any person for any action taken or omitted, or any debt, liability (including any tax liability), or obligation incurred by or on behalf of BNZ KiwiSaver or any member, the Trustee is entitled to be fully indemnified out of the assets of BNZ KiwiSaver (or where the obligation relates solely to a particular fund or funds, out of the assets of those funds). The Trustee's right to indemnification is subject to the requirements of the Trust Deed to treat each fund as a separate trust, as set out under the heading Investment funds on pages 18 to 19. Under those provisions, any indemnity for a liability for tax attributable to an insolvent fund would be apportioned between the other funds on such fair and equitable basis as we determine. For more information, please refer to Part 6 of this Prospectus. This indemnity applies despite provisions in the Trust Deed which confirm that the Trustee acts on the members behalf (and not on its own account) in incurring any liabilities or taking any action under the Trust Deed, and that it will have no personal liability for the satisfaction of any obligation or claim arising out of or in connection with any contract or other obligation of BNZ KiwiSaver. However, the Trustee s right to indemnification is subject to section 116J of the KiwiSaver Act which voids any provision that would have the effect of exempting or indemnifying the Trustee from liability for breach of trust in the event that it fails to exercise the care, diligence and skill that a prudent trustee would exercise in acting as the trustee of a KiwiSaver scheme. In addition, the Trustee is personally liable for any loss arising out of its wilful default or wilful breach of trust. None of the Trustee, the Trustee s nominee companies, nor any of their directors, officers or agents, guarantee the repayment of, or the payment of any earnings on, the interests in BNZ KiwiSaver /

15 6. DESCRIPTION OF SCHEME AND ITS DEVELOPMENT 6.1 Date of Trust Deed BNZ KiwiSaver is governed by a trust deed dated 8 January 2013 (and amended on 1 July 2014), and any Establishment Deed entered into pursuant to that deed (being, at the date of this Prospectus, Establishment Deeds for the Cash Fund, Conservative Fund, Moderate Fund, Balanced Fund and Growth Fund between us and the Trustee dated 28 January 2013 and the Establishment Deed for the First Home Buyer Fund dated 16 September 2015), each as amended from time to time. In this Prospectus, Trust Deed means the trust deed, the Establishment Deeds and, in relation to a Participating Employer, the relevant Participation Agreement. The terms and conditions of the Trust Deed are for the benefit of, and are binding on, each member and all persons claiming through that member. 6.2 Principal terms of the Trust Deed The information set out below only includes a summary of the main provisions of the Trust Deed, which are not addressed elsewhere in this Prospectus. If more detail is required, you should review the Trust Deed. You can request a copy of any of these documents from us or the Trustee. Copies are also available from the Companies Office website at Structure BNZ KiwiSaver is constituted by the Trust Deed. The principal purpose of BNZ KiwiSaver is to provide retirement benefits to natural persons in accordance with the KiwiSaver Act. The Trustee holds all contributions and other assets of BNZ KiwiSaver for members on the trusts established in accordance with the terms of the Trust Deed. The Trustee is also responsible for supervising our performance of our functions (set out below). We are responsible for (among other things): offering interests in BNZ KiwiSaver for subscription; issuing interests in BNZ KiwiSaver; managing the investments and property of BNZ KiwiSaver; and administering BNZ KiwiSaver, including maintaining the register. We have delegated some of our administrative responsibilities to MMC, BNZ and Trustees Executors Limited /

16 Membership Admission You can become a member of BNZ KiwiSaver: in accordance with sections 47 and 48 of the KiwiSaver Act (where us and your employer have agreed that you will have access to BNZ KiwiSaver); subject to the Relevant Requirements, by completing an Application Form at the back of the investment statement for BNZ KiwiSaver, online through BNZ internet banking (if you are a BNZ customer), at or at a BNZ store and contracting directly with us to become a member of BNZ KiwiSaver in accordance with section 45 (as a natural person who has chosen to join BNZ KiwiSaver) or section 55 (as a natural person who has chosen to transfer from another KiwiSaver scheme or a Complying Superannuation Fund to BNZ KiwiSaver) of the KiwiSaver Act; while BNZ KiwiSaver is a default KiwiSaver scheme, in accordance with section 52 of the KiwiSaver Act (as a Default Member); or by way of a transfer into BNZ KiwiSaver effected under subpart 3 of Part 2 of the KiwiSaver Act or otherwise in accordance with the KiwiSaver Act. Subject to the Relevant Requirements, we may in our absolute discretion accept or refuse to admit any natural person as a member. We may accept or refuse an application for admission by an employer as a Participating Employer in our absolute discretion. To become a Participating Employer an employer must enter into a Participation Agreement. Cessation of membership You will cease to be a member on the first to occur of the following events: if you die and your personal representative receives your Member s Accumulation from BNZ KiwiSaver in accordance with the KiwiSaver Scheme Rules; you transfer from BNZ KiwiSaver to another KiwiSaver scheme in accordance with the requirements of subpart 3 of Part 2 of the KiwiSaver Act, or to any other superannuation scheme, in accordance with the requirements of the KiwiSaver Act (and you have no further entitlement under BNZ KiwiSaver); and where you have a nil balance, and you receive notice from us under rule 4(5)(b) of the KiwiSaver Scheme Rules that your membership is terminated or you have received your full benefit from BNZ KiwiSaver and have no further entitlement under BNZ KiwiSaver. Accounts We will establish and maintain for each member a Member Account, denominated in Units issued in respect of member and employer contributions, and any Member Tax Credit. Any Australian complying superannuation scheme transfers and transfers from other KiwiSaver schemes will also be recorded in the Member Account /

17 We may also establish and maintain for certain members: an Employer Account if you join through a Participating Employer, denominated in Units issued in respect of employer contributions; and an Overseas Transfer Account, denominated in Units issued in respect of any amounts transferred to BNZ KiwiSaver from an overseas superannuation or pension scheme. Any Australian complying superannuation scheme transfers will be placed into the Member Account and not an Overseas Transfer Account. As at the date of this Prospectus, we have no intention of establishing an Employer Account or an Overseas Transfer Account in respect of any member. Please note that accounts established under BNZ KiwiSaver are not bank accounts. We may also establish and maintain, for a Participating Employer whose contributions are subject to a vesting period, an Employer Reserve Account. This will principally comprise Units issued in respect of amounts forfeited from Employer Accounts after members have left that Participating Employer's employment before completing the vesting period. We may establish other accounts, establish sub-accounts within an account or amalgamate two or more accounts, in each case on such terms and conditions as we consider appropriate. We may transfer Units between accounts on such terms and conditions as we consider appropriate, subject to your consent if required by the KiwiSaver Act. Participating Employer contributions Subject to any minimum contribution amounts set by us, a Participating Employer: must contribute to BNZ KiwiSaver the amounts set out in the Participation Agreement and, subject to the Relevant Requirements, we must accept such contributions; and may make additional contributions to BNZ KiwiSaver in respect of any member at any time. Accepting contributions Subject to the requirements of the KiwiSaver Act and any minimum contribution amounts (see below), we must accept into BNZ KiwiSaver: all amounts paid to BNZ KiwiSaver via Inland Revenue by or in respect of a member under the KiwiSaver Act (including any contributions made by an employer in respect of that member), unless we have reasonable cause to believe that the amounts have not been correctly deducted or remitted to BNZ KiwiSaver or that we have not been provided with the information we require in relation to such amounts by Inland Revenue; any amounts contributed to BNZ KiwiSaver by a Participating Employer as set out in the Participation Agreement (see Participating Employers on page 22); the minimum member contribution required by the KiwiSaver Scheme Rules; and any Member Tax Credits paid to BNZ KiwiSaver in respect of a member /

18 Subject to the Relevant Requirements, if you are entitled to a benefit or to otherwise transfer an amount from a transferor scheme, we will, on such terms and conditions as we determine, accept a transfer from that transferor scheme of an amount notified to us by the trustee(s) or manager or equivalent of that transferor scheme. We may, subject to the Relevant Requirements, accept contributions other than in cash. We may accept other contributions payable to BNZ KiwiSaver by or in respect of a member, and may impose such terms and conditions for such acceptance. We must cancel Units and repay contributions which we determine were paid by mistake (unless prevented by the Relevant Requirements or agreed otherwise) or which we should have refused to accept on the basis that acceptance would contravene the Relevant Requirements. Minimum contribution amounts Subject to the Relevant Requirements, the amount of any contribution to BNZ KiwiSaver must not be less than any minimum amount determined by us. We may waive any minimum contribution amount either generally or in respect of a particular member or members provided that, for the avoidance of doubt, no such waiver may operate in a manner that is inconsistent with section 66 of the KiwiSaver Act or any other Relevant Requirements. Investment funds From time to time we may agree with the Trustee to establish separate funds within BNZ KiwiSaver. The terms and conditions for each fund will be set out in the Trust Deed or in an Establishment Deed for the relevant fund, and must include written investment guidelines. We can only change the written investment guidelines if we give the Trustee 14 days prior written notice of our intention to do so. Each fund will be treated by us and the Trustee as a separate and distinct trust with its separate property and liabilities governed by the Trust Deed. In summary: all assets held for a fund will not be available to meet the liabilities of any other fund; all liabilities incurred in relation to a fund will be met from the assets held for that fund; except to the extent necessary to meet the liabilities incurred in relation to a fund, all investments made with assets of a fund will be held by or on behalf of the Trustee exclusively for that fund and for the exclusive benefit of members and Participating Employers with interests in that fund (provided that we may transfer value between funds to accommodate BNZ KiwiSaver being a single taxpayer); we must keep separate records and accounts in respect of each fund, and not permit the assets or liabilities of any fund to become intermingled with those of any other fund, except as outlined above; and /

19 the provisions of the Trust Deed relating to the indemnities in favour of us and the Trustee, the fees payable to us and the Trustee and the other costs, expenses, fees, premiums and taxes payable in relation to the management and administration of BNZ KiwiSaver will be construed such that: (i) (ii) (iii) any amount payable from the assets of BNZ KiwiSaver will be payable from the assets held for the fund or funds to which the matter giving rise to the amount relates (except as set out above); where any amount payable from the assets of BNZ KiwiSaver relates to more than one fund, that amount shall be apportioned between those funds on such fair and equitable basis as we determine; and if at any time, and to the extent that, there are insufficient assets in a fund to indemnify or reimburse us or the Trustee in respect of a liability for tax attributable to that fund, the remaining amount payable will be apportioned between the other funds on such fair and equitable basis as we determine. You are entitled to choose the fund (or funds) in which your savings will be invested, subject to complying with any rules prescribed by us regarding the maximum number of funds that may be chosen, minimum investment amounts, switching between funds, communication of choices, choice of default fund (currently the Conservative Fund for all members) and any other matters relating to the choice of funds by members. The establishment of a fund by us, the choice of a fund by an employer and the choice of a fund or funds by a member are directions given with respect to the investment of trust funds for the purposes of section 13G of the Trustee Act Our investment obligations under the Establishment Deed and the Trust Deed constitute a contrary intention for the purposes of section 2(5) and section 2(5A) of the Trustee Act However, no direction that you give us will exempt us from our responsibilities under Rule 1E of the KiwiSaver Scheme Rules. We may, after giving the Trustee 14 days prior notice, terminate, close, wind up or alter any fund, or amalgamate two or more funds, in each case on terms and conditions as decided by us. When the funds are wound up we will notify each affected member, specifying the fund to which you will be deemed to have elected to transfer the relevant amount if you do not choose a replacement fund within the period prescribed in the notice. While BNZ KiwiSaver is a default KiwiSaver scheme, the Conservative Fund cannot be wound up or closed unless a similar fund is offered. Unitisation We will operate BNZ KiwiSaver, and each fund, on a unitised basis, with the beneficial interests in BNZ KiwiSaver and each fund divided into Units. Units in a fund will: be of one class and will confer identical rights and interests; for the purpose of the definition of Investor Class, confer on each member an equivalent interest in all of the investments comprised in the relevant fund corresponding to the member's Investor Interest (or the relevant portion of the member's Investor Interest), but will not confer any interest, /

20 to the exclusion of any other member, in any particular investment comprised in the fund (with the result that no member will be entitled to require the transfer of any investment to the member); not confer any right or interest in the assets of any other fund; and for the purposes of section EX 53 of the Income Tax Act, confer on a member the right to be treated as if there were assigned to that member an interest in a proportion of the net returns from the investments comprised in the fund corresponding to the member's Investor Interest (or the relevant portion of the member s Investor Interest). Each Unit Price will be determined on each valuation day by dividing the Net Asset Value of the relevant fund by the number of Units then on issue in that fund. The valuation day is the day on which each fund is valued in accordance with the Trust Deed. Generally, this is each business day. The assets used to determine the Unit Price on a valuation day will not include amounts received for which no Units have been issued, and will include amounts debited, transferred or withdrawn from any account for which Units have not been cancelled, at the time the determination is made. We will generally issue Units in each relevant fund on the next valuation day after the receipt, payment or transfer of any amount credited to your BNZ KiwiSaver account, subject to delayed unitisation. The Units will be issued based upon the amount received, paid, payable or transferred (net of any amount that we consider appropriate to deduct for fees, expenses or other liabilities, excluding any tax) at the relevant Unit Price or Unit Prices applying on that valuation day. Without limiting the above, but subject to the KiwiSaver Act, we may delay converting into Units any contributions accepted into BNZ KiwiSaver in respect of any member or group of members until we are reasonably satisfied that those contributions have not been paid by mistake. Without limiting the above or any other provision of the Trust Deed (but subject to the KiwiSaver Act) we may, after consulting with the Trustee, determine at any time or times that from a specified date no further Units will be issued pursuant to the Trust Deed (or, if applicable, in relation to a specified fund or funds) either: (a) (b) for a specified period; or until BNZ KiwiSaver, or the relevant fund(s), is or are wound up or terminated, and in that case we will not, after the date specified and for the period contemplated by paragraph (a) or paragraph (b) as applicable, issue any further Units under the Trust Deed or in relation to such fund(s). In respect of Units debited from any account either: pursuant to clause 4 of the Trust Deed; for any tax liability paid or payable by BNZ KiwiSaver (under the PIE regime) as determined by us to be attributable to you; or for any other amounts required to be paid by BNZ KiwiSaver to Inland Revenue under the Income Tax Act as a result of a transfer or withdrawal by you, /

21 we will cancel the number of Units determined by dividing the amount debited by the relevant Unit Price or Unit Prices applying on the next valuation day after we determine that the debit shall be made (provided that, for Units debited on account of tax payable, we may use the valuation day on which we finally determine the amount of tax payable). Subject to the requirements of the KiwiSaver Act, if we decide that to allow a withdrawal or transfer from BNZ KiwiSaver or a switch between funds would not be in the best interests of the members, we may delay paying withdrawals or processing transfers from BNZ KiwiSaver, or allowing switches between funds. We cannot have a delay for more than 10 business days without the prior written approval of the Trustee. Normally such delays may occur, for example, following the end of an income tax period, while we finalise our tax calculations for BNZ KiwiSaver. Valuation We will calculate, at least once every five business days, the amount expressed in New Zealand currency that fairly represents the following in respect of BNZ KiwiSaver and each fund: the Gross Asset Value by adding the market value of the assets attributable to BNZ KiwiSaver or the fund, as applicable; and the Net Asset Value, by deducting the liabilities (excluding, where BNZ KiwiSaver is a PIE, and we consider it appropriate to do so, any liability for tax attributable to BNZ KiwiSaver or the fund, as applicable) from the Gross Asset Value of BNZ KiwiSaver or the fund, as applicable. For the purpose of determining the Net Asset Value and the Gross Asset Value, we will determine the market value of each asset, and the amount of each liability, on a basis that we consider to be fair and equitable in accordance with generally accepted accounting practice as defined in the Financial Reporting Act. These determinations of Net Asset Value and Gross Asset Value will remain in force from the time they take effect until the time determined by us on the next business day that a subsequent determination is made. The Net Asset Value and Gross Asset Value will be determined on a consistently applied basis. However we are entitled to alter the basis of determination in consultation with the Trustee. Benefits You will only be entitled to receive a benefit where and to the extent that the KiwiSaver Act allows. Notwithstanding anything to the contrary in the Trust Deed, benefits will be payable from BNZ KiwiSaver in accordance with the KiwiSaver Scheme Rules. Calculation of Member s Accumulation Subject to our powers while BNZ KiwiSaver is a PIE, when we are required under the KiwiSaver Scheme Rules to calculate an amount representing a Member s Accumulation, we will calculate that amount by: multiplying the Units attributable to the accounts maintained for you by the relevant Unit Price or Unit Prices applying for the purpose of cancelling Units on the next valuation day after we make a final determination that a benefit should be paid; /

22 if you are an employee member, deducting an amount equal to the portion of any Employer Account maintained for you which comprises unvested Participating Employer Contributions as defined in the relevant Participation Agreement; and deducting any further amount that we consider appropriate to deduct with respect to any fee, cost, charge, expense, premium or tax payable pursuant to the Trust Deed or the relevant Participation Agreement. We must adopt a different calculation method if we determine that the method described above does not comply with the KiwiSaver Act, and we may adopt a different calculation method if we consider it appropriate to do so. Where we adopt a differing method it must comply with the Relevant Requirements and we must first consult with the Trustee. Participating Employers If an employer elects to become a Participating Employer, we and the employer must enter into a Participation Agreement. The Participation Agreement will form part of the Trust Deed. The parties may, subject to section 129 of the KiwiSaver Act, amend such Participation Agreement by an instrument in writing. Subject to the Relevant Requirements, in the event of any conflict or inconsistency between the terms of a Participation Agreement and the other terms contained in the Trust Deed, the terms of the Participation Agreement shall prevail. By its entry into a Participation Agreement, each Participating Employer indemnifies us and the Trustee against any costs, expenses or other liabilities resulting from a breach by the Participating Employer of the Relevant Requirements, the Trust Deed or the relevant Participation Agreement. This indemnity survives termination of the Participation Agreement. If you cease to be employed by a Participating Employer (without another employer agreeing to assume the obligations of your former employer under the relevant Participation Agreement), then the provisions of the relevant Participation Agreement cease to apply to you, the terms and conditions prescribed for your continuing membership of BNZ KiwiSaver may be modified (subject to the KiwiSaver Act and the Trust Deed) in the manner we consider appropriate, and you will be notified accordingly. If your employer ceases to participate in BNZ KiwiSaver as a Participating Employer (without another employer agreeing to assume the obligations of your former employer under the relevant Participation Agreement), then subject to the terms of the relevant Participation Agreement: the Employer Account relating to you will be transferred or credited to your Member Account; a pro-rated portion of the relevant Employer Reserve Account will be transferred or credited to your Member Account after any relevant expenses have been paid or deducted from that Employer Reserve Account; the Participating Employer will be under no obligation whatsoever to make any future contributions to BNZ KiwiSaver pursuant to the Participation Agreement in relation to you; and the Participating Employer will have no rights or powers whatsoever in respect of BNZ KiwiSaver in relation to you /

23 If any Participating Employer: ceases to operate or an order is made or resolution is passed for its liquidation or receivership; breaches the terms of the Participation Agreement and the breach is not remedied to our satisfaction; or gives us at least three months notice in writing (or such lesser period as we may in our absolute discretion accept) that it wishes to revoke a Participation Agreement, then the Participating Employer shall be treated as having terminated its obligations under the relevant Participation Agreement (and the relevant account balances shall be dealt with as set out above). Appointment, retirement and removal of the manager Subject to the Relevant Requirements, we can retire as manager of BNZ KiwiSaver, without giving any reason, if we give 90 days prior written notice to the Trustee of our intention to do so (or such lesser period as we agree with the Trustee) provided that our retirement will not take effect until a new manager has been appointed in relation to BNZ KiwiSaver and the new manager has executed a deed in such form as the Trustee may require. Subject to and without prejudice to the Relevant Requirements, we can also be removed as manager if a resolution is passed or an order is made for our winding up, if we are placed in receivership or statutory management, or if the Trustee applies to the High Court for our removal from office if the Trustee is satisfied that: there is a significant risk that the interests of members will be materially prejudiced; or the provisions of the Trust Deed are no longer adequate to give proper protection to members. Where there is a vacancy in the office of manager or we have retired or been removed, a new manager may be appointed subject to any Relevant Requirements by the previous manager (subject to the Trustee s approval, which cannot be unreasonably withheld) or, failing the previous manager, by the Trustee. The new manager must be legally eligible to take office, including in accordance with section 116B(2) of the KiwiSaver Act, and must not be an associated person of the Trustee. Administration and powers of the manager We are responsible for the administration and investment of BNZ KiwiSaver and each fund in accordance with the Trust Deed and the Relevant Requirements. We must: use our best endeavours and skill to exercise our powers, authorities, functions and discretions under the Trust Deed in a proper, timely and efficient manner; act in the best interests of members; exercise the care, diligence and skill that a prudent person engaged in the profession or business of acting as a manager would exercise in managing the affairs of others, unless we are exercising a power of investment; /

24 in exercising a power of investment, exercise the care, diligence and skill required of a trustee by section 13B or 13C of the Trustee Act 1956 (which applies despite anything to the contrary in section 13D of the Trustee Act 1956); use our best endeavours and skill to ensure that we exercise our powers, authorities, functions and discretions under the Trust Deed in a proper and efficient manner; in the exercise and performance of our functions, powers and duties, act with the standard of care, diligence, skill and vigilance that would be expected of a person acting in the same capacity and familiar with, and experienced in, the obligations imposed on us under the Trust Deed; and comply, in the exercise and performance of our functions, powers and duties, with the Scheme Provider Agreement and the investment guidelines for each fund, and ensure compliance by BNZ KiwiSaver with the Relevant Requirements. Subject to the provisions of any law to the contrary, we may (upon giving the Trustee 14 days prior notice of our intention to do so) delegate the performance of any of our powers, authorities, or discretions to an officer or an employee or any other nominee, but we remain liable (after doing so) for the acts and omissions of those delegates. We have additional powers and discretions in respect of BNZ KiwiSaver for so long as BNZ KiwiSaver is a PIE, including the power and discretion to take all steps that we consider necessary or desirable to ensure that BNZ KiwiSaver is eligible or continues to be eligible as a PIE, or otherwise to comply with the requirements of the Income Tax Act relating to PIEs. We may take all other steps and do all things that we think necessary or desirable at our complete discretion to convert BNZ KiwiSaver to or from being a PIE in accordance with the Trust Deed, or to administer BNZ KiwiSaver as a PIE. We also have additional powers and discretions in respect of BNZ KiwiSaver for the purposes of obtaining and administering the Member Tax Credit payable to BNZ KiwiSaver in respect of members. Appointment, retirement and removal of the Trustee BNZ KiwiSaver must have a single trustee which holds a licence under the FMS Act that covers interests in BNZ KiwiSaver and is not an associated person of us. Subject to the Relevant Requirements, the Trustee may retire as trustee without giving any reason if it gives us 120 business days prior written notice of its intention to do so (or such lesser period as we agree to) provided that the retirement will not take effect until all functions and duties have been performed or the High Court consents, and a new trustee (which holds a licence under the FMS Act that covers interests in BNZ KiwiSaver) has been appointed by us, the new trustee has executed a deed as required by us and all of the assets of BNZ KiwiSaver have been transferred to the new trustee or its nominee. Subject to the Relevant Requirements, we may remove the Trustee from office: with immediate effect, by giving the Trustee written notice of the removal, if we reasonably believe that BNZ KiwiSaver will be adversely affected if the Trustee continues to hold office (specifying in this notice the grounds on which we have formed this belief); or otherwise if we give the Trustee no less than 90 days prior written notice (or such lesser period as we agree with the Trustee) of such removal, /

25 provided that the removal will not take effect until a new trustee has been appointed by us, the new trustee has executed a deed as required by us and all of the assets of BNZ KiwiSaver have been transferred to the new trustee or its nominee. We may not discharge or remove the Trustee unless we do so under section 23 or 38 of the FMS Act or with the approval of the High Court. Administration and powers of the Trustee The Trustee must supervise our performance of the functions under section 116B(1) of the KiwiSaver Act, which include offering interests in BNZ KiwiSaver for subscription, issuing interests in BNZ KiwiSaver, managing the investments and property of BNZ KiwiSaver and administering BNZ KiwiSaver, and any other functions we perform in relation to BNZ KiwiSaver under the Trust Deed or any law. The Trustee, in exercising its powers and performing its duties as trustee, must also act in the best interests of the members at all times; and exercise the care, diligence, and skill that a prudent person engaged in the profession or business of acting as a trustee would exercise in acting as the trustee of a KiwiSaver scheme. Both we and the Trustee may institute, prosecute, defend, settle and compromise legal proceedings in order to secure compliance with the provisions of the Trust Deed or the Relevant Requirements, and may recover any loss suffered by you in respect of your Units. If the Trustee is satisfied that there is a significant risk that the interests of members will be materially prejudiced, or the provisions of the Trust Deed are no longer adequate to give proper protection to members, the Trustee may apply to the High Court for an order as permitted under the KiwiSaver Act. The Trustee will if so instructed by us, borrow or raise money from any person or otherwise charge or encumber any asset of a fund provided that the total principal amount borrowed or raised does not exceed the amount specified in the relevant Establishment Deed as the limit on borrowings for such fund. The Trustee is not required to take any action which it reasonably believes would cause it to breach the Relevant Requirements or the Trust Deed or place a liability or obligation on the Trustee personally or would be manifestly not in the best interests of members. Subject to the Relevant Requirements, the Trustee may delegate the performance of any of its powers, authorities or discretions (except its responsibility to supervise us which it can only delegate to its own officers and employees) to an officer or an employee or any other nominee, but remains liable (after doing so) for the acts and omissions of those delegates other than (as between the Trustee and us) our actions or any person appointed or authorised by us to carry out any of the powers, authorities or discretions exercisable by us in relation to BNZ KiwiSaver. The Trustee can, after notifying us, nominate one or more persons (other than us or an associated person of us) to hold the investments and property of BNZ KiwiSaver. The Trustee will remain jointly and severally liable with any nominees for the performance of all the duties and obligations imposed on it. If authorised in writing by the Trustee, after notifying us, a nominated person may appoint one or more nominees (other than us or an associated person of us) to hold the investments and property of BNZ KiwiSaver /

26 Power to invest Each fund shall be invested in accordance with any investment guidelines set out in the Establishment Deed of each fund. Those investment guidelines prevail over any requirement we might otherwise have to dispose of or diversify investments, but are subject to the investment rules set out in the KiwiSaver Act, the Instrument of Appointment and the Trustee Act We manage the investment of the assets of BNZ KiwiSaver and each fund, and, subject to the Relevant Requirements and the rules for PIEs under the Income Tax Act, can give the Trustee directions that are considered necessary in that regard to: purchase, acquire, invest, reinvest, lend, sell, transfer, dispose of or realise any investment; enter into any commitment or liability in respect of any investment; execute and deliver such contracts, documents, bills, notes, deeds or other instruments as may be necessary in respect of the foregoing; exercise or refrain from exercising any voting right associated with any investment; and take any other action which may be required in respect of any investment. The Trustee must refuse to act on any investment direction from us if, in the Trustee's opinion (conveyed in writing to us and the Financial Markets Authority), the proposed acquisition or disposal would be in breach of the Trust Deed or the Relevant Requirements, or would be manifestly not in the best interests of BNZ KiwiSaver members. The Trustee will not be liable to you or to us for so refusing to act. Neither we nor the Trustee will be responsible to any member for the investment performance of BNZ KiwiSaver or a fund arising as a result of investing in accordance with the investment guidelines, subject to meeting the standards of care set out in the KiwiSaver Act. In managing the investments of BNZ KiwiSaver, we can engage consultants, advisers, brokers and other professional advisers. Subject to us providing 14 days prior written notice to the Trustee (or such notice as is reasonably practicable) we can deal with a Related Company and neither us nor any such Related Company will be liable to account to the Trustee or any member for any profit arising from such dealings provided the relevant transaction is on commercial arm s length terms (or terms which are better than commercial arm s length terms from the perspective of BNZ KiwiSaver). We will cause investments to be vested in and registered in the name of the Trustee or its nominee as soon as reasonably practicable after the receipt of the necessary documents. The Trustee, if directed to do so by us, may enter into derivative financial instruments for the purpose of investment or risk management. Remuneration of Trustee Subject to rule 2 of the KiwiSaver Scheme Rules, the Trustee will be paid a fee for its services with respect to BNZ KiwiSaver, the amount of which and the basis of calculation to be agreed between us and the /

27 Trustee from time to time. The Trustee is also entitled to receive, in addition to the annual fee, any tax payable in respect of the annual fee. Our Remuneration Subject to rule 2 of the KiwiSaver Scheme Rules, we can charge for our services with respect to BNZ KiwiSaver such annual or other administration, management, membership, transaction or other fees as we determine. The method of paying these fees will be determined by us and notified to the Trustee in writing. We are also entitled to receive, in addition to these fees, any GST payable in respect of such fees. The nature and amount of the fees payable to us at the date of this Prospectus are set out on pages 51 to 52. Trustee s and our indemnities and liability If either we or the Trustee are held personally liable because of any action taken or omitted, or any debt, liability or obligation incurred by or on behalf of BNZ KiwiSaver or any member, then we or the Trustee may be entitled to be indemnified out of the assets of BNZ KiwiSaver (or where the obligation relates solely to a particular fund or funds, out of the assets of those funds), Our entitlement to be indemnified is to the full extent of such liability and the costs of any litigation associated with the liability. We will not be entitled to be indemnified if the liability arises out of wilful default or wilful breach of trust, or from a failure to exercise the care, diligence and skill that a prudent manager or trustee (as applicable) would exercise in acting in that capacity in respect of a KiwiSaver scheme. Under those provisions, any indemnity for a liability for tax attributable to an insolvent fund would be apportioned between the other funds on such fair and equitable basis as we determine. For more information, please refer to Part 6 of this Prospectus. Our right, and the Trustee s right, to indemnification is subject to section 116J of the KiwiSaver Act which voids any provision that would have the effect of exempting or indemnifying us from liability for breach of trust for failing to exercise our respective statutory duties of care. Our right, and the Trustee's right, to indemnification is also subject to the requirements of the Trust Deed to treat each fund as a separate trust, as set out under the heading Investment funds on pages 18 to 19. Without limiting the generality of the foregoing, we and the Trustee are each entitled to be reimbursed out of the assets of BNZ KiwiSaver (or where there is more than one fund and the obligation relates solely to a particular fund or funds, solely out of those funds) for all direct and indirect expenses, losses, costs or liabilities incurred by us respectively in or about acting as manager or trustee under the Trust Deed. Where there are insufficient assets in a fund to reimburse a tax liability for that fund, the amount will be apportioned between the other funds on such fair and equitable basis as we determine. The Trustee is not responsible for any loss incurred as a result of any act, deceit, neglect, mistake or default of us (or any of our agents) and is not required to check any information, document, form or list supplied to the Trustee by us. We are not responsible for any loss incurred as a result of any act, deceit, neglect, mistake or default of the Trustee (or any of the Trustee's agents) and are not required to check any information, document, form or list supplied to us by the Trustee /

28 Limitation of liability of members Except as expressly provided by the Trust Deed (including potential liability for tax, described below), no member is (by reason solely of being a member, or of the relationship that is created with the Trustee or us) under any personal obligation to indemnify us or the Trustee, or any creditor of either of us, in the event of there being any deficiency in the assets of BNZ KiwiSaver or, where there is more than one fund, of a fund, as compared with the liabilities to be met from those assets. Subject to the above, our rights or the rights (if any) of the Trustee, or of any creditor, to seek indemnity are limited to having recourse to the assets of BNZ KiwiSaver (or the relevant fund as the case may be) and do not extend to you personally (in your capacity as a member) except in relation to tax liabilities as outlined in the paragraph Liability for tax below. On the winding up of BNZ KiwiSaver, you will not have any liability to contribute to any shortfall in the assets of BNZ KiwiSaver. Notices and information to members If we want to send you notices and communications about BNZ KiwiSaver, we can leave them at your physical address, send them to your postal address or (subject to you having given your address to us or having otherwise agreed to accept BNZ KiwiSaver-related information in an electronic form) by means of an electronic communication. Liability for tax If the sum of the balances of your Member Account and Employer Account are insufficient to meet any liability for tax which is attributed to you under the Income Tax Act (or which is determined by us or the Trustee to be attributable to you) then you must indemnify the Trustee and us for that shortfall and any penalties or use of money interest imposed by Inland Revenue under the Income Tax Act in connection with that shortfall. You will not otherwise incur any liabilities (including contingent liabilities) in relation to BNZ KiwiSaver. Instrument of Appointment prevails If there is any conflict or inconsistency between the terms of the Instrument of Appointment and the terms of the Trust Deed, the terms of the Instrument of Appointment prevails. Neither us nor the Trustee can take, or omit to take, any action which results in a breach by it or the other of the terms of the Instrument of Appointment. Amendments Subject to Relevant Requirements, the Trust Deed (which includes any Participation Agreement and Establishment Deed) may at any time be amended by a deed executed by us and the Trustee, provided that we may not make any amendment to the Trust Deed that would result in a breach of any applicable law /

29 Winding up As at the date of this Prospectus, we have no intention to wind up BNZ KiwiSaver or any fund. We can wind up BNZ KiwiSaver by resolution in writing. BNZ KiwiSaver must also be wound up on 28 days prior notice to the Trustee if the Financial Markets Authority orders that it is wound up under the KiwiSaver Act, where it has reasonable cause to believe that BNZ KiwiSaver is not operating in accordance with the KiwiSaver Act, or the financial position, security of benefits or the management of BNZ KiwiSaver is inadequate. In winding up BNZ KiwiSaver we will comply with the provisions of the KiwiSaver Act relating to winding up a KiwiSaver scheme. Following the wind up of BNZ KiwiSaver, you will be required to transfer from BNZ KiwiSaver to another KiwiSaver scheme chosen by you or to another default KiwiSaver Scheme selected by Inland Revenue. Any transfer will be made in accordance with the KiwiSaver Act and the Trust Deed. Immediately after winding up BNZ KiwiSaver no one else may be admitted to BNZ KiwiSaver, no further contributions shall be made to BNZ KiwiSaver, and we shall direct the Trustee to realise the assets of BNZ KiwiSaver as soon as reasonably practicable allowing for an orderly sale of the assets of BNZ KiwiSaver and we, on a best endeavours basis, will obtain the best price possible in the circumstances, but in all regards complying with the Relevant Requirements. The proceeds from the sale of the assets shall be used first to pay for all reasonable costs, fees, tax, liabilities, claims and expenses relating to the winding up of BNZ KiwiSaver and any tax liability of BNZ KiwiSaver or of members, second to pay for any benefits payable under the Trust Deed (that has become payable prior to winding up and remain unpaid), third to transfer a benefit equal in value to the Member's Accumulation to another KiwiSaver scheme, and finally to augment all or any of the benefits explained above in an equitable manner as determined by us with any money in BNZ KiwiSaver relating to the Employer Reserve Account. If there is insufficient money in any fund to satisfy all of these obligations, the amount of each benefit shall be reduced equitably and proportionately among all members entitled to benefits out of the fund. However, you will otherwise have no liability to contribute to any shortfall in the assets of BNZ KiwiSaver (or, where there is more than one fund, of a fund), except to the extent that liability for tax arises (see page 28 for more detail). If BNZ KiwiSaver is wound up then each Participating Employer will be treated as having terminated the relevant Participation Agreement on the wind up date. Applicable Terms and Conditions BNZ provides services to you, such as BNZ internet banking. Accordingly, when using these services in conjunction with BNZ KiwiSaver, you will be bound by BNZ s Standard Terms and Conditions in relation to your use of those services. These terms and conditions can be viewed at Employee contributions As an employee, you must contribute either 3%, 4%, or 8% of your before-tax pay to your KiwiSaver account. Your employer will deduct your contributions from your take home pay and then pay them to Inland Revenue, who will then pass them on to us. If you do not choose a contribution rate, your contributions will be deducted at the 3% rate /

30 You can change your contribution rate, or take a contributions holiday if you want to temporarily stop contributing to your KiwiSaver account. See page 31 for more details about how to change the rate at which you contribute, the restrictions on when you can take a contributions holiday and how to take a contributions holiday. You can also make additional lump sum payments when you wish. See page 31 Voluntary contributions for details. Employer contributions If you are contributing from your before-tax pay to your KiwiSaver account, then your employer will also generally contribute 3% of your before-tax pay to your KiwiSaver account. It s important to know that your employer may not have to contribute to your KiwiSaver account if: (a) (b) you are either under the age of 18, or over your Qualifying Age; your employer makes contributions to another superannuation scheme for you and certain other conditions apply. Your employer will be able to let you know if they do not have to make KiwiSaver contributions for you. Employer contributions have tax deducted from them before they are credited to your KiwiSaver account. See page 62 under the heading Tax on contributions for further information. You should check with your employer to understand if your employer contributions are paid in addition to your before-tax pay or if they form part of your total pay arrangements with your employer. Inland Revenue holding account When you first become a KiwiSaver member, Inland Revenue will hold any contributions they receive for you until you ve been a member of KiwiSaver for three months. Once you ve been a KiwiSaver member for three months they will pass these contributions plus interest to us. It can take up to three months for your employer or employee contributions to reach BNZ KiwiSaver. This is because your employer generally only passes contributions on to Inland Revenue on the 20th of the month following their deduction, and then Inland Revenue takes some time to process and check the contributions before it passes them on. During the time your contributions are held by Inland Revenue they will earn interest which will be passed to us with your contributions. If you have any questions about the amount of your contributions held by Inland Revenue, or the total amount of your employer or employee contributions that they have processed, you can contact Inland Revenue directly. Not an employee If you don t earn a salary or wage, then you can choose how much and when you wish to contribute to your BNZ KiwiSaver account. You can set up a bill payment, automatic payment or direct debit authority, or you can simply make lump sum payments when you want /

31 Member Tax Credit If you are over 18 and below your Qualifying Age, then for each Member Tax Credit year (1 July to 30 June) the Government will (if you are eligible) contribute 50 cents for every $1 you pay into your KiwiSaver account, up to a maximum Member Tax Credit of $ This means that you have to contribute at least $1, per year and be an eligible KiwiSaver member for the whole Member Tax Credit year to get the maximum contribution from the Government. In most cases you need to be mainly residing in New Zealand to qualify for the Member Tax Credit, although overseas Government workers, charity workers, and some volunteers may also qualify. If this might apply to you, get in touch with us so that we can help you work out whether you qualify for a Member Tax Credit. The Member Tax Credit is generally paid to KiwiSaver schemes annually in around July/August. If you ve been a KiwiSaver member for less than a full year when the Member Tax Credit is paid, if you ve been 18 for less than a full year, if you ceased to principally reside in New Zealand part way through the year, or if you reached your Qualifying Age part way through the year, you ll receive a Member Tax Credit based on the number of days in the year during which you qualified for it. You don't have to do anything to get paid the Member Tax Credit, as we'll apply for it on your behalf. However, you do need to tell us if your principal place of residence stops being New Zealand, or if you otherwise stop being eligible for the Member Tax Credit. Voluntary contributions You can make voluntary contributions to us at any time through your usual banking methods (for example, direct debit, automatic payment, cheque, internet transfer, cash deposit, or bill payment). You can also make regular or one-off payments to your account by paying amounts directly to Inland Revenue. Uncleared funds and failure to make contributions Contributions made by you or on your behalf which are cancelled or reversed, and contributions at a nonstandard rate or below any minimum threshold may result in the cancellation of Units issued to you in reliance on those contributions. Minimum investment amount There is no minimum investment amount, although once you have reached your Qualifying Age you may be required to close your account if it contains less than $1,000. In addition, provided we notify you, we may close your KiwiSaver account at any time if you have a nil balance. Changes to your contributions If you contribute from your pay, you can change your required contribution rate to either 3%, 4% or 8% of your before-tax pay at any time by notifying your employer. Unless the employer agrees, you cannot change your contribution rate more than every three months. Your new rate will apply to the next pay after you notify your employer /

32 If you contribute directly to your BNZ KiwiSaver account, you can change the frequency and/or amount of your regular payment, or cancel it entirely, at any time. Contributions holiday If you re an employee, you re entitled to take a contributions holiday (which is when contributions to BNZ KiwiSaver are suspended) if at least 12 months have passed since your first contribution to a KiwiSaver scheme or Complying Superannuation Fund, in which case your contributions holiday can be for a period of between three months and five years. If you are suffering, or are likely to suffer, financial hardship and Inland Revenue has received at least one contribution from you, you can apply to Inland Revenue for an earlier contributions holiday. If granted, your contributions holiday will be for a maximum of three months (or a longer period, if Inland Revenue agrees). You can apply for another contributions holiday when one expires. You can also revoke or reinstate a contributions holiday at any time by notifying your employer. Your employer may suspend its contributions to BNZ KiwiSaver for your benefit while you are on a contributions holiday. Withdrawals Withdrawals from BNZ KiwiSaver will be made by selling Units when, or after, you reach your Qualifying Age or when you make any earlier withdrawals permitted under the KiwiSaver Act and the Trust Deed. Withdrawals are not otherwise permitted. Retirement benefits You can withdraw your KiwiSaver savings when you reach your Qualifying Age. After that age, you can withdraw all or part of your savings at any time. If you have transferred money from an Australian complying superannuation scheme to your KiwiSaver account, this amount can be withdrawn when you reach age 60 and satisfy the retirement definition in Australian legislation. Investment earnings received on this transferred amount cannot be withdrawn until you reach your Qualifying Age. As at the date of this Prospectus, partial lump sum withdrawals must be for $500 or more, and your remaining account balance must not be less than $1,000. If your remaining balance falls below $1,000, you may have to make a full withdrawal and we may close your account. As at the date of this Prospectus, you may also choose to make regular withdrawals after reaching your Qualifying Age to supplement your income in retirement. Regular withdrawals must be for a minimum of $50 per week, $100 per fortnight, $400 per month, $1,000 per quarter or $2,000 per year (or such other frequency as we may agree). Please note that if your account balance falls below $1,000, you may have to make a full withdrawal and we may close your account. We can change these amounts and introduce other withdrawal requirements from time to time. You will be notified of any changes /

33 Early withdrawals This section sets out the types of withdrawals you can apply for before you reach your Qualifying Age. In some cases, you cannot withdraw your full account balance. Refer to the table Your early withdrawal entitlements on page 37 for details. First home withdrawal You may make a one-off withdrawal from a KiwiSaver scheme to purchase your first home if: the land or house you are purchasing is in New Zealand; it has been at least three years from the date Inland Revenue received your first contribution to a KiwiSaver scheme, or you have been a member of one or more KiwiSaver schemes or Complying Superannuation Funds for a combined total period of three years or more; the land or house is, or is intended to be, your principal place of residence; and you have never held an estate in land (there are some detailed rules regarding when a person holds an estate in land). The purchase of an interest in a building on Maori land qualifies as a first home where: the building s intended principal use is occupation as a private residence; and the building is or is intended to be your principal place of residence. To make a first home withdrawal, there is a process that must be followed and certain information that must be provided. Your lawyer or conveyancing practitioner must provide a copy of the sale and purchase agreement ( agreement ), and give undertakings on your behalf. The undertakings and process will differ depending on whether the agreement is conditional or unconditional. Please refer to the Home Purchase Withdrawal application form on bnz.co.nz/kiwisaver for further information on the detailed requirements. If you make a partial withdrawal of your full entitlement for a first home withdrawal, then we will release your and your employer contributions and investment gains first, and your Member Tax Credits second, subject to a minimum balance of $1,000, and any transferred Australian complying superannuation scheme savings remaining. Your membership of BNZ KiwiSaver will continue after a first home withdrawal is paid from your KiwiSaver account. See the table on page 37 for details of what you can withdraw as part of a first home withdrawal. KiwiSaver HomeStart grant Under current Government policy, you may apply to Housing New Zealand for a KiwiSaver HomeStart grant if: you re 18 years or over; /

34 you have belonged and contributed at least the required minimum percentage of your income to a KiwiSaver scheme, Complying Superannuation Fund or exempt employer scheme for at least three years; you have a deposit that is 10 percent or more of the purchase price of the house you are buying (for this purpose, any KiwiSaver first home withdrawal or KiwiSaver HomeStart grant you may be eligible for can be counted towards this deposit amount, even though, for purchases of existing homes, the KiwiSaver HomeStart grant is not paid out until settlement); you re buying your first home and you re going to live in the house for at least six months; and you meet the household income and regional house price caps as set out on the Housing New Zealand website. For full details of the eligibility criteria for a KiwiSaver HomeStart grant, visit the Housing New Zealand website at hnzc.co.nz or call them on Any HomeStart grant will be paid and administered by Housing New Zealand. The HomeStart grant for the purchase of an existing home is a one-off contribution of $1,000 for each year of contributions to one or more of the qualifying schemes (see above) up to a maximum of $5,000 per member. The HomeStart grant for the purchase a brand new home, a property off plans, or land to build a new home on is a one-off contribution of $2,000 for each year of contributions to one or more of the qualifying schemes (see above) up to a maximum of $10,000 per member. Here is a summary of the KiwiSaver HomeStart grant entitlements: Number of years of regularly contributing to one or more of the qualifying schemes If you are purchasing an existing home If you are purchasing a new home, a property off the plans or land to build a new home on 3 years $3,000 (the minimum ) $6,000 (the minimum) 4 years $4,000 $8,000 5 years $5,000 (the maximum) $10,000 (the maximum) Second chance home buyers If you have owned a home before, but no longer have a share in a property, you may also be eligible for a first home withdrawal and a KiwiSaver HomeStart grant, as long as you: have not received either the first home withdrawal or a first home deposit subsidy or KiwiSaver HomeStart grant before; and are in a similar position to first home buyers in terms of assets, income and liabilities. If you ve previously owned a home, you will need to contact Housing New Zealand for confirmation that you re in a similar position to first home buyers, and show us this confirmation before applying to make a first home withdrawal. To find out more, visit the Housing New Zealand website at or call them on /

35 Significant financial hardship You may apply to make a significant financial hardship withdrawal. Generally, you should make an application only because of: your inability to meet minimum living expenses; your inability to meet mortgage repayments on your principal family residence resulting in a mortgagee seeking to enforce the mortgage; the cost of modifying a residence to meet special needs arising from your own or a dependant s disability; the cost of medical treatment for your own or a dependant s illness or injury; the cost of palliative care for you or a dependant; or the cost of a funeral for a dependant. You ll need to complete a withdrawal request and a statutory declaration of assets and liabilities and provide evidence that you are suffering or likely to suffer significant financial hardship as defined under the KiwiSaver Act and that all reasonable alternative sources of funding have been explored and exhausted. See the table on page 37 for details of what you can withdraw as part of a significant financial hardship withdrawal if your application is approved by the Trustee. The Trustee can limit the withdrawal amount to a lesser amount than what is available in your KiwiSaver account (if it decides that a lesser amount is all that you need to alleviate your hardship). If you make a significant financial hardship withdrawal, the amount withdrawn can include any Australian sourced amount, but only to the extent that the New Zealand sourced contributions able to be withdrawn (which will be paid to you first) are insufficient. Your membership of BNZ KiwiSaver will continue after your significant financial hardship withdrawal is paid. Serious illness You may apply to make a serious illness withdrawal if you have an injury, illness or disability that: results in you being totally and permanently unable to engage in work for which you are suited by reason of experience, education or training, or any combination of those things; or poses a serious and imminent risk of death. If your application is accepted by the Trustee, you can withdraw some or all of your KiwiSaver savings. You ll need to complete a withdrawal request and provide evidence (such as medical evidence) that you are suffering from a serious illness as defined under the KiwiSaver Act to support your withdrawal request /

36 Death If you die while a member of BNZ KiwiSaver, all of your KiwiSaver savings will be payable, on request, to the executors or administrators of your estate. Alternatively, if your KiwiSaver savings are less than the prescribed amount (currently $15,000) and certain other conditions are met, we may pay your KiwiSaver savings direct to (for example) a surviving partner or caregiver. Contact us for further information. Our contact details are set out on page 68. Permanent emigration If you permanently emigrate from New Zealand to anywhere other than Australia: you can make a withdrawal of your KiwiSaver savings (except any Australian sourced amount and Member Tax Credits) one year after you permanently emigrate from New Zealand; and alternatively, you may immediately apply for the transfer of your KiwiSaver savings (excluding your Member Tax Credits) to any overseas superannuation scheme authorised by regulations made under the KiwiSaver Act. As at the date of this Prospectus, no such regulations have been made. You ll need to complete a withdrawal request and provide evidence that confirms that you have permanently emigrated. Once you ve met the requirements, your account balance, excluding all Member Tax Credits and any Australian sourced amounts, will be paid to you as a lump sum. Your Member Tax Credits are repaid to Inland Revenue and you will cease to be a KiwiSaver member (unless you have any Australian-sourced amounts, which will remain in your KiwiSaver account). If you permanently emigrate to Australia: you are not able to withdraw your KiwiSaver savings (unless you otherwise qualify for a withdrawal, for example due to serious illness); but you can transfer your KiwiSaver savings (including your Member Tax Credits) to an Australian complying superannuation scheme that is willing to accept the transfer. If your KiwiSaver savings are above the maximum amount set out in Australian legislation, you will not be able to transfer your KiwiSaver savings. For more information on the cap that applies, please call us on Alternatively, your KiwiSaver savings can remain invested in BNZ KiwiSaver. For more information on transferring your KiwiSaver savings to an Australian complying superannuation scheme, please call us on Transfer from a non-australian superannuation scheme You may apply to make a withdrawal from your BNZ KiwiSaver account to pay any New Zealand tax liability or student loan repayment obligation that arises as result of you transferring to BNZ KiwiSaver from a non-australian foreign superannuation scheme. You will need to apply for the withdrawal within two years of the date of the assessment of the income tax liability or student loan obligation and provide certain information to us to support your withdrawal request. See page 10 for further details /

37 Your early withdrawal entitlements Here is a brief overview of your early withdrawal entitlements: Employer and member contributions* and all returns Member Tax Credits Government kick-start contribution** Australian sourced amounts First home buyer*** 'Second chance' home buyer*** Significant financial hardship Serious illness Death Permanent emigration (except to Australia) Permanent emigration (to Australia)- scheme transfers only Foreign superannuation transfers - NZ tax or student loan obligation *Member contributions include amounts transferred into your BNZ KiwiSaver account from non-australian superannuation schemes. **Applies if you first joined a KiwiSaver scheme prior to 2pm on 21 May *** A minimum of $1,000 must be retained in your KiwiSaver account following a first home withdrawal. Transfer to another KiwiSaver scheme If at any time you are accepted as a member of another KiwiSaver scheme, we will transfer all your KiwiSaver savings to that scheme. Some KiwiSaver schemes may not accept Australian sourced funds. If you have these funds, you may not be able to transfer to certain KiwiSaver schemes because you can be a member of only one KiwiSaver scheme at a time. You may be required to transfer to another KiwiSaver scheme in certain circumstances, for example if BNZ KiwiSaver is wound up /

38 In these circumstances, you will be given an opportunity to choose another KiwiSaver scheme. If you do not choose one, you will be transferred to your employer s chosen KiwiSaver scheme (if any) or to another default KiwiSaver scheme selected by Inland Revenue. There may be tax payable when you transfer (for whatever reason) to another KiwiSaver scheme see Tax summary on page 59. Other early withdrawals We must comply with the provisions of any legislation or a Court order (such as a property sharing order under the Property (Relationships) Act 1976) that requires us to release some or all of your KiwiSaver savings. General When a withdrawal is paid from BNZ KiwiSaver, the amount you receive will reflect the value of the redeemed Units at the time, less any fees, taxes, expenses and other authorised deductions from your account. Contributions that qualified for a Member Tax Credit when made to BNZ KiwiSaver will continue to qualify even if, before the tax credit for the relevant year is paid, those amounts have been withdrawn. You can t withdraw your Member Tax Credits: before you (or your personal representative or other relevant person) give us a statutory declaration stating the periods for which you have had your principal place of residence in New Zealand; or if we have noticed that your claim for a Member Tax Credit is wrong because you have not met the residence requirements for certain periods. How to request a withdrawal You can request a withdrawal by completing the relevant withdrawal form and dropping it into us or sending it to us. Please contact us if you d like us to send a withdrawal form to you, or you can download the form from our website Our contact details are set out on page 68. It may take some time to consider an early withdrawal request and we may come back to you to ask for further evidence to support your application. Payment You will normally receive payment of your early withdrawal within ten business days of your application being approved. You will normally receive payment of your retirement benefit after your Qualifying Age within 15 business days after we finalise your completed withdrawal request. The value of your investments will generally be determined by reference to the Unit Price applying on the day after your withdrawal request is finalised. The Unit Price may go up or down between the date on /

39 which you submit your withdrawal request, the date on which it is approved or received, and the date on which the relevant Units are actually redeemed. Deferral of payments Subject to the requirements of the KiwiSaver Act, if we decide that to allow a withdrawal or transfer from BNZ KiwiSaver would not be in the best interests of the members, we may delay paying withdrawals from BNZ KiwiSaver or allowing switches between funds. We cannot delay payment for more than 10 business days without the prior written approval of the Trustee. Normally such delays may occur, for example, following the end of an income tax period, while we finalise our tax calculations for BNZ KiwiSaver. See Liquidity risk on page 57 for more information about other circumstances in which we may delay payments. Not all investments required to satisfy your withdrawal request may be sold on the same day. Proceeds of sales may be held in an account in the name of the Trustee or its nominee until sufficient investments have been sold to fully satisfy your withdrawal request. 6.3 Conditions of entry and termination of membership The conditions to entry into, and exit from, BNZ KiwiSaver can be found under the heading Membership on page 16. Restrictions on investment The restrictions around investments in BNZ KiwiSaver can be found under the heading Power to invest on page 26. Rights and obligations of employers The rights and obligations of Participating Employers can be found under the heading Participating Employers on page Investment and Material Activities and Developments The following is a brief description of the investment and other material activities and developments relating to BNZ KiwiSaver during the period since BNZ KiwiSaver was established and the date of registration of this Prospectus: BNZ KiwiSaver commenced operating on 11 February Money was first accepted into BNZ KiwiSaver from that date. BNZ KiwiSaver has invested in accordance with the investment policy and performance objective for each fund since it commenced operating. On 16 April 2014, the Minister of Finance and the Minister of Commerce appointed us as a KiwiSaver default provider with effect from 1 July On 1 July 2014, the Trust Deed was amended to incorporate the changes required as a result of us becoming a KiwiSaver default provider. On 16 September 2015, the First Home Buyer Fund was established /

40 On 17 September 2015, Russell Investments ceased to be an investment manager for BNZ KiwiSaver, but continues to provide investment advice to us in relation to BNZ KiwiSaver. 6.5 Section 9A of the Financial Reporting Act BNZ KiwiSaver has separate funds for the purposes of section 9A of the Financial Reporting Act or section 461A of the Financial Markets Conduct Act Contingent liabilities The only liabilities (including contingent liabilities) that you might incur in relation to BNZ KiwiSaver can be found under the heading Liability for tax on page Investment policy and performance objectives The investment policy and objective for each fund, as at the date of this Prospectus, is shown below. There is no guarantee that the investment objectives of any fund, or (if relevant) of the underlying fund(s) into which that fund invests, will be achieved. Underlying fund investment policy The funds may invest by holding assets directly or investing into other investment funds. As at the date of this Prospectus, all the funds (except the Cash Fund) invest their assets (except for New Zealand cash) into other investment funds, rather than holding assets directly. We may change this approach (including for New Zealand cash) at any time without updating this Prospectus. The latest approach is described on our website, or is available by calling us on The funds will be exposed to the investment management activities implemented by the investment funds they invest into. For example, those investment funds may have greater flexibility regarding the use of derivatives and borrowing when compared to the funds in BNZ KiwiSaver, may hold cash and may enter into securities lending, repurchase and other transactions. Underlying investment managers As at the date of this Prospectus, we utilise the skills and experience of a range of specialist underlying investment managers by investing in other investment funds managed by related parties of Russell Investments, except for BNZ KiwiSaver s New Zealand cash investments. During the life of this Prospectus, we may choose to utilise specialist underlying investment managers to invest New Zealand cash by investing in other investment funds. We may change the funds that BNZ KiwiSaver invests in, and the underlying investment managers may be added to, removed, or replaced, at any time without notice being given to you. Details of the specialist underlying investment managers indirectly managing some of the funds assets, and the latest approach to investing in New Zealand cash (including details of any specialist underlying investment managers used, and any investment manager appointed) are available at or by calling us on /

41 Russell Investments Russell Investments is part of the Russell group of companies worldwide. The Russell group was originally founded in 1936 and, as at the date of this Prospectus, has 22 offices worldwide and more than NZ$363 billion worth of assets under management globally. Russell Investments offers actively managed, multi-asset portfolios and services that include advice, investments and implementation. Working with institutional investors, financial advisers and individuals, Russell Investments core capabilities extend across capital markets insights, manager research, asset allocation and portfolio implementation. Russell Investments has a long history of researching, selecting and monitoring investment managers from around the world. One of its core capabilities is identifying and blending specialist investment managers in an investment style referred to as a multi manager approach. A multi manager approach brings together a number of specialist investment managers with different but complementary investment styles. To find out more about Russell Investments go to Currency hedging policy Where the funds are invested in international (including Australian) fixed interest income and share investments, currency movements may affect investment performance. The effects of currency movements can be reduced or minimised by fully or partially hedging the currency effects (trading foreign currency to offset the impact of currency movements). As at the date of this Prospectus, we intend to seek to fully hedge international investments (other than Australian shares) to the New Zealand dollar to the greatest extent practicable. Investments in Australian shares may be hedged to the New Zealand dollar at the underlying investment manager s discretion. While this approach continues: the value of Australian share investments could be affected by Australian currency changes relative to the New Zealand dollar and the decisions made on the level of hedging; and other international investments should not be significantly affected by currency movements. We may change our hedging approach at any time without updating this Prospectus. Changes could cause the value of international investments to be more or less affected by changes in currency values. The latest approach in relation to currency hedging is described on our website, or is available by calling us on Cash Fund Objective: The Cash Fund may suit you if you have a short term investment horizon or if you have a very cautious approach to investing. Risk/Return Characteristics: The returns from the Cash Fund (before tax, fees and expenses) will be similar to the returns from bank deposits. In all likelihood, there will be low volatility of returns. This means there will not be significant movements up or down in the value of your investments. Generally investment returns are likely to be lower, over the medium to long term, than funds that also invest in growth assets (for example, shares). Investment returns may not exceed the rate of inflation (after tax, fees and expenses). The performance objective is to provide a gross return above the return of the ANZ NZ 90 Day Bank Bill Gross Return Index on a rolling 12 month basis /

42 Policy: As at the date of this Prospectus, the fund will gain its exposure to New Zealand cash by investing directly or indirectly in bank deposits and short term securities. The fund may use derivatives to manage risk. First Home Buyer Fund Objective: The First Home Buyer Fund may suit you if you have a short investment time frame (for example, someone who may be saving for their first home through BNZ KiwiSaver) and are prepared to accept a small amount of investment risk to achieve returns which may be higher than returns from bank deposits (before tax, fees and expenses) over that timeframe. Risk/Return Characteristics: There may be some volatility in the returns for this fund. This means there may be some movements up or down in the value of your investments. Generally investment returns are likely to be lower, over the longer term, than funds that invest a higher proportion of growth assets (for example, shares). Returns may vary and at times may be low or negative. Policy: The First Home Buyer Fund will invest principally in cash and fixed income investments (which are typically considered lower risk investments), with a small exposure to growth assets including New Zealand and international shares. Investments are diversified geographically, through holding international assets and fixed income investments. The fund may use derivatives to manage risk and for investment purposes. The benchmark for the First Home Buyer Fund is shown in the following table. This is the target asset allocation of the fund over the long term. The actual mix of the fund will vary (typically, but not always, within agreed ranges), depending on factors like market movements, changes in values of the underlying investments and the ability to invest or divest. Benchmark % Range NZ Cash NZ & Australian Fixed Income 1 International Income Fixed % Income Assets NZ & Australian Shares International Shares Growth Assets As at the date of this Prospectus, with the exception of New Zealand cash, the fund will gain exposure to the asset classes referred to in the table above by investing in funds managed by related parties of Russell Investments. The benchmark and range represent the target exposure to those funds and do not require a look through to the assets held by those funds. As at the date of this Prospectus, the fund will gain its exposure to New Zealand cash by investing directly or indirectly in bank deposits and short term securities /

43 Some of these underlying funds invest in assets outside of New Zealand in currencies other than the New Zealand dollar. As such, returns in New Zealand may be affected by movements between the New Zealand dollar and other currencies. Please see page 57 of this Prospectus for further information about currency risk. Conservative Fund (default fund) Objective: The Conservative Fund may suit you if you have a short to medium investment timeframe, and you are prepared to accept a small amount of investment risk to achieve returns which may be higher than returns from bank deposits (before tax, fees and expenses) over that timeframe. Risk/Return Characteristics: There may be some volatility in the returns for this fund. This means there may be some movements up or down in the value of your investments. Generally investment returns are likely to be lower, over the longer term, than funds that invest a higher proportion in growth assets (for example, shares). Returns may vary and at times may be low or negative. Policy: The Conservative Fund will invest principally in cash and fixed income investments (which are typically considered lower risk investments), with a small exposure to growth assets including New Zealand and international shares. Investments are diversified geographically, through holding international assets and fixed income investments. The fund may use derivatives to manage risk and for investment purposes. The benchmark for the Conservative Fund is shown in the following table. This is the target asset allocation of the fund over the long term. The actual mix of the fund will vary (typically, but not always, within agreed ranges), depending on factors like market movements, changes in values of the underlying investments and the ability to invest or divest. Benchmark % Range NZ Cash NZ & Australian Fixed Income 1 International Income Fixed % Income Assets NZ & Australian Shares International Shares Growth Assets As at the date of this Prospectus, with the exception of New Zealand cash, the fund will gain exposure to the asset classes referred to in the table above by investing in funds managed by related parties of Russell Investments. The benchmark and range represent the target exposure to those funds and do not require a look through to the assets held by those funds. As at the date of this Prospectus, the fund will gain its exposure to New Zealand cash by investing directly or indirectly in bank deposits and short term securities /

44 Some of these underlying funds invest in assets outside of New Zealand in currencies other than the New Zealand dollar. As such, returns in New Zealand may be affected by movements between the New Zealand dollar and other currencies. Please see page 57 of this Prospectus for further information about currency risk. Moderate Fund Objective: The Moderate Fund may suit you if you have a medium investment timeframe, and you are prepared to accept some investment risk to achieve returns which may be higher, over the medium term, than funds with a higher investment in income assets (cash and fixed income investments). Risk/Return Characteristics: There will be some volatility in the returns for this fund. This means there will be some movements up or down in the value of your investments. Generally investment returns are likely to be lower, over the medium to long term, than funds that invest a higher proportion in growth assets (for example, shares). Returns may vary and at times may be low or negative. Policy: The Moderate Fund will principally invest in cash and fixed income investments (which are typically considered lower risk investments), with some exposure to growth assets including New Zealand and international shares. Investments are diversified geographically, through holding international assets and fixed income investments. The fund may use derivatives to manage risk and for investment purposes. The benchmark for the Moderate Fund is shown in the following table. This is the target asset allocation of the fund over the long term. The actual mix of the fund will vary (typically, but not always, within agreed ranges), depending on factors like market movements, changes in values of the underlying investments and the ability to invest or divest. Benchmark % Range NZ Cash NZ & Australian Fixed Income 1 International Income Fixed % Income Assets NZ & Australian Shares International Shares Growth Assets As at the date of this Prospectus, with the exception of New Zealand cash, the fund will gain exposure to the asset classes referred to in the table above by investing in funds managed by related parties of Russell Investments. The benchmark and range represent the target exposure to those funds and do not require a look through to the assets held by those funds. As at the date of this Prospectus, the fund will gain its exposure to New Zealand cash by investing directly or indirectly in bank deposits and short term securities /

45 Some of these underlying funds invest in assets outside of New Zealand in currencies other than the New Zealand dollar. As such, returns in New Zealand may be affected by movements between the New Zealand dollar and other currencies. Please see page 57 of this Prospectus for further information about currency risk. Balanced Fund Objective: The Balanced Fund may suit you if you have a medium to long term investment timeframe, and you are prepared to accept a medium to high level of investment risk to achieve the potential of higher investment returns over the medium to long term. Risk/Return Characteristics: There will be more volatility in the returns of this fund. This means there will be more movements up or down in the value of your investments, than funds that invest a lower proportion in growth assets (for example, shares). Returns may vary and at times may be low or negative. Policy: The Balanced Fund will invest in a diversified portfolio which includes cash, New Zealand and international shares, and fixed income investments. Investments are diversified geographically, through holding international assets and fixed income investments. The fund may use derivatives to manage risk and for investment purposes. Growth assets, like shares, normally make up half of the Balanced Fund s portfolio. The benchmark for the Balanced Fund is shown in the following table. This is the target asset allocation of the fund over the long term. The actual mix of the fund will vary (typically, but not always, within agreed ranges), depending on factors like market movements, changes in values of the underlying investments and the ability to invest or divest. Benchmark % Range NZ Cash NZ & Australian Fixed Income 1 % International Fixed Income Income Assets NZ & Australian Shares International Shares Growth Assets As at the date of this Prospectus, with the exception of New Zealand cash, the fund will gain exposure to the asset classes referred to in the table above by investing in funds managed by related parties of Russell Investments. The benchmark and range represent the target exposure to those funds and do not require a look through to the assets held by those funds. As at the date of this Prospectus, the fund will gain its exposure to New Zealand cash by investing directly or indirectly in bank deposits and short term securities /

46 Some of these underlying funds invest in assets outside of New Zealand in currencies other than the New Zealand dollar. As such, returns in New Zealand may be affected by movements between the New Zealand dollar and other currencies. Please see page 57 of this Prospectus for further information about currency risk. Growth Fund Objective: The Growth Fund may suit you if you have a long term investment timeframe and will not need to access the balance of your account for at least 10 years. You will also be prepared to accept a high level of investment risk to achieve the potential of higher investment returns over the long term. Risk/Return Characteristics: There will be more volatility in the returns of this fund than any of the other funds in BNZ KiwiSaver. This means there will be more movements up or down in the value of your investments, but with the potential to generate higher returns than the other funds over the long term (10 years plus). Returns will vary and at times will be low or negative. Policy: The Growth Fund will invest in a diversified portfolio which is mainly made up of growth assets such as New Zealand and international shares. A small holding of fixed interest and cash assets are also held in the portfolio, because of the diversification and investment benefits they provide. Investments are diversified geographically, through holding international assets and fixed income investments. The fund may use derivatives to manage risk and for investment purposes. Growth assets, like shares, typically make up approximately 70% of the Growth Fund s portfolio. The benchmark for the Growth Fund is shown in the following table. This is the target asset allocation of the fund over the long term. The actual mix of the fund will vary (typically, but not always, within agreed ranges), depending on factors like market movements, changes in values of the underlying investments and the ability to invest or divest. Benchmark % Range NZ Cash NZ & Australian Fixed Income 1 International Fixed Income % Income Assets NZ & Australian Shares International Shares Growth Assets As at the date of this Prospectus, with the exception of New Zealand cash, the fund will gain exposure to the asset classes referred to in the table above by investing in funds managed by related parties of Russell Investments. The benchmark and range represent the target exposure to those funds and do not require a look through to the assets held by those funds. As at the date of this Prospectus, the fund will gain its exposure to New Zealand cash by investing directly or indirectly in bank deposits and short term securities /

47 Some of these underlying funds invest in assets outside of New Zealand in currencies other than the New Zealand dollar. As such, returns in New Zealand may be affected by movements between the New Zealand dollar and other currencies. Please see page 57 of this Prospectus for further information about currency risk. 1 As at the date of this Prospectus, investment in Australian fixed income assets can range between 0% and 20% of the allocation to NZ & Australian Fixed Income. 2 As at the date of this Prospectus, investment in Australian shares can range between 0% and 30% of the allocation to NZ & Australian Shares. Default Fund If you: become a member of BNZ KiwiSaver on starting new employment due to BNZ KiwiSaver being a default KiwiSaver scheme or your employer's chosen KiwiSaver scheme; or give an employer a KiwiSaver scheme deduction notice and then do not choose a KiwiSaver scheme within three months after Inland Revenue receives contributions on your behalf (where BNZ KiwiSaver is your employer's chosen KiwiSaver scheme), then, if you do not choose a fund, your savings will be automatically invested into the default fund for BNZ KiwiSaver, which is currently the Conservative Fund. Your savings will also be automatically invested into the Conservative Fund if you have joined BNZ KiwiSaver and either not chosen an investment fund or your investment instructions to us on the application form are unclear. Changes to the funds you invest in You can change the funds you invest in or the amounts you invest in each fund at any time. This is often called switching your investment. An easy way to do this is through BNZ internet banking. Or you can call or come in to see us at your local BNZ store. You can: change the way your current account balance is invested; and/or change the way any new contributions to your account are invested. Allocations to a fund must not be less than 5% of any contribution amount, and the selected allocations must add up to 100%. Changes may take up to 3 business days to process. No switch fees currently apply. Tax will be calculated and withheld (where appropriate) from any amount that is switched between funds. We may hold or reject change requests where they may cause BNZ KiwiSaver to breach PIE eligibility requirements /

48 Changes to fund investment policy and objectives Under the Trust Deed we can, after notifying the Trustee, vary the investment policy and objective for any of the funds (subject to legal compliance). This means we can change the manner in which each fund s assets are invested, including the investment guidelines and strategy, the objective, the asset allocation, and benchmark targets and ranges, without notice to you. The Conservative Fund s asset allocation and benchmark ranges (or those of any default fund that replaces it) are required to comply with the requirements in the Instrument of Appointment, which is the document that appoints us as a KiwiSaver default provider. The make-up of any underlying investment fund into which a fund invests may also change from time to time, which in turn can alter the asset allocations in the relevant fund. Subject to the requirements of the KiwiSaver Act, we can, after notifying the Trustee, also close, wind up or alter any fund, or set up a new fund. While BNZ KiwiSaver is a default KiwiSaver scheme, the Conservative Fund cannot be wound up or closed unless a similar fund is offered. We can also set or change rules from time to time relating to funds, including setting or changing a maximum number of funds that can be chosen and a minimum amount that must be invested in a fund. We may appoint or change investment manager(s) for each fund from time to time without notice to you. During the life of this Prospectus we are considering appointing Nikko to manage BNZ KiwiSaver s investment in New Zealand cash. If the appointment is made or revoked, it will be published on and you can call us on for any updates on the appointment. 6.8 Investment Performance BNZ KiwiSaver was established on 8 January Money was first accepted into BNZ KiwiSaver and investment activity commenced on 11 February 2013, which is treated as the inception date for the purposes of investment performance (except for the First Home Buyer Fund). The investment performance of each fund (other than the First Home Buyer Fund) is set out below. As at the date of this Prospectus, there is no investment performance to report for the First Home Buyer Fund, as it was established on 16 September The returns below are calculated on the change in the Unit Price of each fund over the period specified, adjusted for tax credits. Each member's return will vary based on the Unit Price applicable to each contribution or withdrawal that is made and how long they have been invested for. Returns represent historical performance only and are not an indication or guarantee of future performance. The value of a fund may rise or fall depending on market conditions /

49 Returns before tax and monthly member fees The returns below are calculated after deducting management fees (excluding the monthly member fee) and before deducting tax in accordance with the Income Tax Act. The returns since inception are for a period longer than a year and are annualised. Fund name 1 April 2014 to 31 March April 2013 to 31 March 2014 Since inception 11 February 2013 to 31 March 2015 Cash 3.24% 3.29% 3.13% p.a. Conservative 9.52% 3.89% 6.13% p.a. Moderate 11.92% 5.51% 8.01% p.a. Balanced 13.01% 7.93% 9.63% p.a. Growth 13.96% 10.74% 11.43% p.a. Returns after tax but before monthly member fees The returns below are calculated after deducting management fees (excluding the monthly member fee) and tax at the highest PIR rate in accordance with the Income Tax Act. The returns are calculated on the same basis as the returns disclosed in accordance with the KiwiSaver (Periodic Disclosure) Regulations The returns since inception are for a period longer than a year and are annualised. Fund name 1 April 2014 to 31 March April 2013 to 31 March 2014 Since inception 11 February 2013 to 31 March 2015 Cash 2.30% 2.37% 2.24% p.a. Conservative 7.45% 3.37% 4.99% p.a. Moderate 9.67% 4.93% 6.73% p.a. Balanced 10.94% 7.26% 8.35% p.a. Growth 12.28% 9.84% 10.21% p.a. 7. SUMMARY OF FINANCIAL STATEMENTS The latest annual financial statements for BNZ KiwiSaver were prepared for the period 1 April 2014 to 31 March 2015 and were authorised for issue by our directors on 17 July The summary financial statements are attached at Appendix A /

50 The amounts in the summary financial statements have been taken from and should be read in conjunction with the full audited financial statements for BNZ KiwiSaver that comply with, and have been registered under, the Financial Reporting Act. The full audited financial statements have been prepared in accordance with New Zealand generally accepted accounting practice. They comply with: the New Zealand equivalent standards to the International Financial Reporting Standards; other applicable New Zealand Financial Reporting Standards as appropriate; and International Financial Reporting Standards. The summary financial statements are set out in accordance with Schedule 5A of the Securities Regulations. The terminology used under the Securities Regulations is different to the terminology used under the New Zealand equivalent standards to the International Financial Reporting Standards. The Auditor s report on the summary financial statements is dated 17 September 2015 and is attached at Appendix B. The presentation currency is New Zealand dollars and has been rounded to the nearest thousand dollars. 8. GUARANTORS None of BNZ, or any other member of the National Australia Bank Limited group, the Trustee, and any other directors of any of them, the Crown or any other person guarantees (either fully or in part) the performance or returns of BNZ KiwiSaver or the repayment of capital. National Australia Bank Limited, the ultimate parent of BNZ, is not a registered bank in New Zealand, but it is a licensed bank in Australia and is therefore subject to the supervision of the Australian Prudential Regulation Authority. 9. ACQUISITION OF BUSINESS OR EQUITY SECURITIES Since establishment, no business or equity securities have been acquired for the purposes of clause 9 of Schedule 5A to the Securities Regulations /

51 In this section, we describe the fees that are payable to the people involved in providing the BNZ KiwiSaver Scheme 10. INTERESTED PERSONS Fees and expenses The fees that are payable in relation to BNZ KiwiSaver are set out below: Type of fee or expense Amount How and when paid Management fees*: Cash Fund First Home Buyer Fund Conservative Fund (default fund) Moderate Fund Balanced Fund Growth Fund Member fee The fee for the administration of your account. Investment Fund Switch fee The fee to change the fund(s) you invest in. Up to 0.35% p.a. 0.50% p.a. 0.58% p.a. 0.90% p.a. 1.00% p.a. 1.10% p.a. $1.95 per member per month (or part month). Nil This fee is paid from the applicable fund, and is reflected in its Unit Price. The management fee is calculated as a percentage of the Gross Asset Value of each fund on each valuation day. See note 1. This fee is paid from your account in arrears generally on the first business day following the end of each month. If your KiwiSaver account has a nil balance, the member fee may be deferred until a positive balance arises. See note 2. No switch fee is payable. *The management fees shown in the above table may be different to the amount disclosed in the quarterly and annual periodic disclosure statements published for the BNZ KiwiSaver Scheme. The way management fees are required to be calculated in those statements is different to the way management fees are charged. Important notes 1. Management fees As at the date of this Prospectus, the management fee for the Cash Fund is 0.30% per annum. The management fee for each fund is calculated as a percentage of the Gross Asset Value of that fund on each valuation day and is reflected in that fund's Unit Price. The valuation day is the day on which each fund is valued in accordance with the Trust Deed. Generally, this is each business day. The management fee is paid to us monthly in arrears. We will pay the following fees, costs and expenses out of the management fee for each fund: /

52 that fund s proportionate share of the Trustee s fee for trustee and custody services (a fee capped at 0.04% per annum plus GST or any other applicable tax or duty (if any) of the Gross Asset Value of BNZ KiwiSaver calculated on each valuation day); fees, costs and expenses incurred in connection with the management and operation of the fund (including an allowance for GST), such as audit fees, registry and fund accounting, marketing and distribution costs, including any fees payable to BNZ for its services, MMC for its accounting services and the Registrar for its registry services; fees payable to Russell Investments in respect of investment advisory services provided for that fund; fees payable to any investment manager appointed in respect of investment management services provided for that fund; and through payments to the underlying fund manager(s), rebates or other adjustments, that fund s proportionate share of the fees, costs and expenses incurred in connection with the ordinary operation, administration or investment management of the underlying funds into which that fund directly invests. The management fee for each fund doesn t include: direct or indirect costs of buying, selling or investing in assets for example, transaction costs such as brokerage, which are incurred when assets are bought and sold; entry and exit fees charged by underlying funds into which a fund invests; and charges for listed investments. These costs are payable by the funds, as you would pay if you were buying or selling the assets yourself; extraordinary fees and expenses for example fees and expenses associated with any member meetings or significant regulatory change including the Trustee s special fees in such circumstances. There is no limit on these fees and expenses. You can see the amount of any such additional fees and expenses in the financial statements for BNZ KiwiSaver for the relevant year in which they were incurred; or any performance fees charged by the underlying fund(s) into which the fund directly or indirectly invests. These costs are payable by the funds. 2. Member fee A member fee of $1.95 per member per calendar month (or part calendar month) is generally paid from your account in arrears on the first business day following the end of each month and paid to us for the administration of your account. If your KiwiSaver account has a nil balance, the member fee may be deferred until a positive balance arises. Entry and exit fees As at the date of this Prospectus, there are no entry or exit fees charged for buying or selling Units in BNZ KiwiSaver. However, occasionally, if there are large volumes of contributions relative to withdrawals, the /

53 Unit Price you pay may be adjusted to pass on some of the costs of investing those contributions to those members who are buying Units, so members who are not buying Units are not impacted by those costs. The amount of the adjustment to the Unit Price will be used to meet the brokerage, spread or transaction costs which arise from investing the net contributions. Usually these costs are met from the assets of the respective fund. Exchange rate fees If you transfer savings to (or from) BNZ KiwiSaver from (or to) an Australian complying superannuation scheme, or from another foreign superannuation scheme, currency exchange rate fees will be built into the exchange rate(s) applicable to your transferred savings. Reimbursements We and the Trustee are entitled to be reimbursed from the funds for all expenses, losses, costs or liabilities (and the costs of defending claims) incurred in managing or supervising BNZ KiwiSaver. However, reimbursements cannot be made if the loss arises out of wilful default, wilful breach of trust or breach of the standard of care or other duties imposed by law. GST All fees are stated on a GST exclusive basis. Under current law some fees are wholly or partially exempt from GST. The percentage of fees subject to GST is currently under review by Inland Revenue and may change in the future. If GST is payable on any of the fees, then the GST component would be payable in addition to the fee stated. Changes We and the Trustee may increase existing fees or introduce new fees on giving 30 business days' prior written notice to you and in accordance with the Trust Deed and, in respect of the Conservative Fund, the terms of the Instrument of Appointment. There is no limit on the amount by which a fee can be changed, although the fees payable in respect of the Conservative Fund and by Default Members are limited by the Instrument of Appointment. Under the KiwiSaver Act, all fees charged to you must be reasonable. You can apply to the Court for an order that an unreasonable fee be annulled or reduced. Any such application must be made within one year of the day that the fee is imposed or debited. Related party transactions BNZ KiwiSaver may use related parties to provide services in respect of the funds. For example: the funds may invest their cash investments directly or indirectly in bank deposits and short term securities with BNZ, National Australia Bank Limited, or any of their related companies; the funds may invest in other managed investment schemes managed by the Manager or any of its related companies; and the banking arrangements for BNZ KiwiSaver are provided by BNZ /

54 All related party arrangements will be conducted on arms length commercial terms. As at the date of this Prospectus, investments in New Zealand cash (including the Cash Fund), are currently made by investing in bank deposits and short term securities with BNZ. This approach to investing in New Zealand cash may change at any time without updating this Prospectus. The latest approach (including details of any specialist underlying investment managers used, and any investment manager appointed) is described on our website, or is available by calling us on Interested persons We intend to pay BNZ a fee for the distribution of, and support services provided in relation to, BNZ KiwiSaver. Any such fee will be paid out of our management fee. MMC, Russell Investments, the Trustee and the Registrar also receive fees in relation to the services they provide to BNZ KiwiSaver, as well as Nikko, if appointed as an investment manager. These fees will also be paid out of the management fee. See pages 51 and 52 for further details of these fees. Each of our directors, BNZ s directors and the Trustee s directors may be members of BNZ KiwiSaver. Scheme investments During the two years prior to the date of this prospectus, more than 10% of the value of the assets of BNZ KiwiSaver was at times invested in: the BNZ Cash PIE, which invests in deposits with BNZ; or deposits with BNZ. 11. MATERIAL CONTRACTS The following material contracts (not being contracts entered into in the ordinary course of business of BNZ KiwiSaver) have been entered into in respect of BNZ KiwiSaver in the two years preceding the date of registration of this Prospectus: Establishment Deed for the First Home Buyer Fund between us and the Trustee, dated 16 September 2015; On 17 September 2015, the Investment Management Agreement between us and Russell Investments was replaced by an Investment Advisory and Subscription Agreement appointing Russell Investments to continue to provide investment advice to us in relation to the funds and to provide underlying investments for BNZ KiwiSaver; On 4 September 2015, the KiwiSaver Default Provider (BNZ) Notice 2014 was amended by the KiwiSaver Default Provider (BNZ) Amendment Notice 2015 to remove the reference to Russell Investments being the lead investment manager; Amendment to the BNZ KiwiSaver Scheme Trust Deed between us and the Trustee, dated 1 July 2014; and /

55 On 16 April 2014, the Minister of Finance and the Minister of Commerce executed the KiwiSaver Default Provider (BNZ) Notice 2014, which provided the mandate for BNZ KiwiSaver to operate as a default KiwiSaver scheme, with effect from 1 July This document is also known as the Instrument of Appointment. An establishment deed sets out the terms and conditions on which the relevant fund is established. 12. PENDING PROCEEDINGS There are no legal proceedings or arbitrations pending at the date of registration of this Prospectus that may have a material adverse effect on BNZ KiwiSaver. 13. OTHER TERMS OF OFFER AND SCHEME All other terms of the offer, and all terms of BNZ KiwiSaver (other than terms relating to amounts payable by or to individuals, terms implied by law and terms set out in the material contracts referred to in Part 11 of this Prospectus) are set out in this Prospectus. Additional relevant information can also be found in the investment statement for BNZ KiwiSaver and in the Application Form at the back of the investment statement for BNZ KiwiSaver. 14. FINANCIAL STATEMENTS AND AUDITOR S REPORT The latest annual financial statements for BNZ KiwiSaver relate to the period 1 April 2014 to 31 March 2015 and were registered under the Financial Reporting Act on 23 July The Auditor s report on those financial statements is dated 17 July The Auditor s report does not refer to any fundamental uncertainty and is unqualified. There is also an Auditor s report on the summary financial statements. This report is dated 17 September 2015 and is attached at Appendix B. 15. PLACES OF INSPECTION OF DOCUMENTS The Trust Deed, any other material contracts referred to in this Prospectus, the latest annual financial statements for BNZ KiwiSaver and the latest annual report for BNZ KiwiSaver may be inspected, without fee, at our principal place of business (as specified on page 68) during normal business hours. These documents (excluding the Instrument of Appointment and the annual report) are also filed on the public register with the Registrar of Financial Service Providers and copies are available, without fee, at under Search Other Registers or (on payment of the relevant fee) by telephoning the Ministry of Business Innovation & Employment, Economic Development Group on The Instrument of Appointment can be viewed and printed from the Financial Markets Authority s website OTHER MATERIAL MATTERS 16.1 Risks All investments involve risk. Risk is the likelihood of not getting all your money back, or getting a different return than you expect. Each fund invests your money differently and provides a different level of risk and potential return based on how that fund is invested. The funds are listed below from the lowest to highest risk: /

56 Cash First Home Buyer Conservative (default fund) Moderate Balanced Growth More information on the risk characteristics of each fund is available on pages 40 to 47. For help to choose a fund that s right for you, see the investment statement for BNZ KiwiSaver. Investment Risks The main types of investment risks for BNZ KiwiSaver are summarised below: Investment Asset Risk: This is a risk of negative or lower than expected returns from the fund(s) you invest in. While all investments carry investment risk, the level of this risk varies based on the type of investment assets into which each fund invests. In general terms, funds that invest higher proportions in growth assets (like shares) will carry a higher level of investment risk as they are usually most affected by market risk and are exposed to stock selection risks. Funds that invest higher proportions in income assets (like cash and fixed income investments) will generally have lower investment risk. Fixed income investments are affected by interest rate movements and default rates. For funds invested only or predominantly in cash, the risks are the counterparty default risk and that the rate of inflation will exceed returns (after tax, fees and expenses) meaning that the purchasing power of your KiwiSaver savings may reduce over time. Short term fluctuations in the value of a fund are common, particularly for those funds with a greater allocation to growth assets. Different types of investments perform differently through market cycles and each type of asset carries a different type of risk. Each of the funds, with the exception of the Cash Fund, invests into a range of investment assets. The main risks associated with each of the investment assets are as follows: Cash: Cash is generally suitable for short term investment timeframes. The principal risk of investing into cash is that the return will not keep pace with inflation. This could mean that the purchasing power of your account balance may reduce over time. Fixed Income: Fixed income is generally suitable for short to medium term investment timeframes. The value of a fixed income security can be affected by changes in interest rates and default rates. Shares: Shares are generally suitable for longer term investment timeframes. The principal risks of investing in shares are the economic performance of a particular sector or company and changes in general market sentiment and opinion /

57 The selection and performance of an investment manager, the underlying investment managers, and individual assets or securities held by the funds can also influence the performance of the funds (both positively and negatively). Other risks include borrowing within the assets or securities held by the funds, and counterparty default. Market risk: Investment markets are affected by a host of factors, including economic, taxation and regulatory conditions, market sentiment, political events, inflation, interest rate movements, currency movements, and environmental and technology issues. These factors apply to investments made in New Zealand and overseas. Currency risk: As some of the assets of BNZ KiwiSaver are invested outside New Zealand, fluctuations in the exchange rate may affect the returns on those assets. The extent to which this currency exposure is hedged can mitigate currency risk. For information on the current hedging policy see page 41. For members transferring savings from an Australian complying superannuation scheme, the amount of money transferred will be affected by the exchange rate at the time of transfer. Derivative risk: Financial instruments known as derivatives may be used by BNZ KiwiSaver to manage risk. In essence, a derivative is a financial instrument, the value of which is dependent on an underlying financial asset; for example shares, currencies, etc. In some circumstances, however, derivatives can actually increase risk, by exaggerating the movement in the underlying asset's value. Any investment manager and some specialist underlying fund managers may use derivatives or borrowing to increase the exposure to selected investments as part of their investment strategy. The primary risks of using derivatives include: Price or basis risk: The risk that a price change in the market underlying a derivative contract, or in the derivative contract itself, is not matched by the price change in the derivative position held. Leveraging risk: The risk that any losses will be magnified by creating greater exposure to a market than that of the assets backing the position. Liquidity risk: The risk that a derivative position cannot be reversed. Counterparty risk: The risk that the party on the other side of a derivative contract defaults on payments. General Risks There are general risks that affect all funds in BNZ KiwiSaver: Liquidity risk: If there is a mismatch between the maturity profile of the assets of BNZ KiwiSaver and the amount required to meet withdrawal requests, there is a risk that BNZ KiwiSaver could be unable to make payments on time. Similarly, if the underlying assets of BNZ KiwiSaver become illiquid, then BNZ KiwiSaver may be unable to sell those assets, which would in turn restrict its ability to make payments on time. Where BNZ KiwiSaver invests into underlying funds, there is a risk that the managers or trustees of those underlying funds may suspend or defer the payment of withdrawal requests in certain circumstances (which could be /

58 for an indefinite period of time). Liquidity risk may increase if a large number of withdrawals are requested by members in a fund or investors in an underlying fund. In these events your ability to withdraw (including transferring to another KiwiSaver scheme), or switch between the funds in BNZ KiwiSaver may be impacted. Loss of PIE tax status: Although we have mechanisms available to manage compliance with the PIE eligibility requirements, there is a risk that BNZ KiwiSaver could lose its PIE status if there is a breach of the PIE requirements under the Income Tax Act and we do not become aware of the breach in time to correct it. Loss of PIE tax status would result in BNZ KiwiSaver being taxed at a flat rate of 28% instead of the PIRs of individual members. Legislative risk: Changes to existing law or the introduction of new laws could have a significant impact on an investment in BNZ KiwiSaver. There have been changes previously to the KiwiSaver rules, including the employer, employee and Government contribution rates and changes could occur in the future. Changes to tax rates, the PIE tax regime or tax legislation generally could also impact on your returns. If relevant legislation or policy changes, we will co-operate with the Trustee to make such amendments to the Trust Deed, and such other changes to the administration of BNZ KiwiSaver, as are considered necessary or desirable in light of those changes. Borrowing: Where borrowing has occurred in relation to BNZ KiwiSaver or an underlying fund, the lender will have the right to demand payment from BNZ KiwiSaver or that fund. BNZ KiwiSaver does not intend to borrow, other than to cover payment mismatches or to cover shortfalls in payments of expenses, fees, and tax due to timing mismatches described under Liquidity risk on the previous page. However, underlying funds may borrow. Operational risk: If we, the Trustee or any of the parties appointed by us to provide services to BNZ KiwiSaver fail to perform their obligations then this may adversely affect your KiwiSaver account. If we, any investment manager, the specialist underlying fund managers, the Trustee or any service providers experience a failure of processes and procedures (including system failures or suspension of withdrawals from their funds), fraud, business disruption or any other form of unforeseen external event (including insolvency, receivership, liquidation, statutory management or voluntary administration), this may affect your investment in BNZ KiwiSaver. There is also a risk that your employer may delay passing or fail to pass your contributions and their employer contributions to Inland Revenue, who then pass these amounts to us. Any failure of your employer to perform its obligations could adversely affect you. Product risk: From time to time changes may be made to BNZ KiwiSaver. These changes could include changing the objective or characteristics of a fund, the asset allocation, specialist underlying investment managers, the third parties appointed to provide services, and fees. If any of these risks eventuate, it is reasonably foreseeable that on withdrawal you may receive less than the amount you invested /

59 Personal liability Other than tax liability which you may incur as a result of advising us the wrong PIR, or failing to advise us when your PIR changes, there are no circumstances in which you will be required to pay any further money than that stated on page 29 ( Employee contributions ). Winding up or insolvency As at the date of this Prospectus, we have no intention to wind up BNZ KiwiSaver or any fund. If at a future point we resolve or are required to wind up BNZ KiwiSaver or a fund, then, claims of creditors of the relevant fund(s), claims for tax, fees and expenses payable in the normal course of business, and other claims preferred at law, will rank ahead of claims by members. Accordingly, you may not recover the full amount paid to BNZ KiwiSaver by you or on your behalf. However, you are not liable to contribute to any shortfall in the assets of BNZ KiwiSaver or any fund. All investments made with the moneys of a fund must be held exclusively for that fund, and for the exclusive benefit of the members who have Units in that fund. This means that all liabilities incurred in relation to a fund must be met only from the assets held for (or apportioned to) that fund, except: where we transfer value between the funds to accommodate BNZ KiwiSaver being a single taxpayer, or where (and only to the extent that) there are insufficient assets in a fund to meet a liability for tax attributable to that fund. We will not permit the assets or liabilities of any fund to become intermingled with those of any other fund, and we will maintain separate records in respect of each fund. If BNZ KiwiSaver is wound up, your claim on the assets of BNZ KiwiSaver will rank equally with the claims of other members in the funds in which you have invested. Following the wind up of BNZ KiwiSaver, you will be required to transfer from BNZ KiwiSaver to another KiwiSaver scheme chosen by you or to your employer s chosen KiwiSaver scheme (if any) or to another default KiwiSaver scheme selected by Inland Revenue. Any transfer will be made in accordance with the KiwiSaver Act and the Trust Deed Tax Tax summary Tax affects the returns you receive from BNZ KiwiSaver. Below is a general summary of the New Zealand tax implications of investing in BNZ KiwiSaver. The information is based on our understanding of taxation law that applies as at the date of this Prospectus. It is intended solely as a guide. Tax legislation, its interpretation and the rates and basis of taxation are subject to change /

60 For tax advice relating to your specific circumstances, we recommend that you consult a professional tax adviser before investing in BNZ KiwiSaver. For further information on tax matters, you can refer to the IRD website Tax rules applying to the BNZ KiwiSaver Scheme BNZ KiwiSaver is a portfolio investment entity ( PIE ). Tax is calculated by BNZ KiwiSaver on your share of the taxable income earned by the funds (after allowing for applicable fees and expenses) at your notified prescribed investor rate ( PIR ), which is outlined below. The calculation basis and timing of taxable income recognised by BNZ KiwiSaver in respect of each investment is dependent upon the nature of the investment itself. Certain types of investments may give rise to gains which are taxable on an unrealised basis or a basis that may not directly correlate to realised or unrealised gains arising from the investment. Any capital gains (or losses) made by BNZ KiwiSaver on shares in New Zealand resident companies and Australian resident companies that are listed on an approved Australian Stock Exchange index and maintain a franking credit account, are not taxable (or deductible). Any dividends received from these investments will be taxable. Most overseas shares (not being certain Australian shares) and interests in foreign managed funds held by BNZ KiwiSaver are taxed under the fair dividend rate method. Under the fair dividend rate method, BNZ KiwiSaver is deemed to have received income each year equal to 5% of the average daily market value of the shares or interests. Any dividends or other returns (including profits from sale) received from those overseas shares and interests are not separately taxable. Generally, a tax deduction may not be claimed for any losses. BNZ KiwiSaver is taxed under the ordinary tax rules in respect of its other income. All interest received and all gains on financial instruments, including hedging derivatives, are generally taxable (with a deduction for any losses). Calculation of tax BNZ KiwiSaver calculates the tax balance on your account every valuation day using your PIR. Your tax balance is settled with Inland Revenue shortly after the end of each tax year (ended 31 March). If you close your account, switch some of your investment to a different investment fund or make a partial withdrawal during the tax year, a proportional amount of your tax balance will be settled with Inland Revenue shortly after the transaction is processed. If there is a tax loss (or your attributed New Zealand tax credits exceed the tax liability attributable to you) for a tax return period, we are able to claim a tax rebate which will be credited to your BNZ KiwiSaver account in the form of additional Units. Prescribed Investor Rates (PIRs) Your PIR is the rate used to calculate the tax payable by BNZ KiwiSaver on your share of the taxable income of the BNZ KiwiSaver Scheme for that tax year. Provided you notify the correct PIR, there will usually be no more tax for you to pay /

61 The following PIRs apply: New Zealand Tax Resident Individuals (who provide their IRD number to us) 10.5% In one of the last two income years: your taxable income * was $14,000 or less; and the sum of your taxable income * and income from all your PIE investments after subtracting any loss from your PIE investments was $48,000 or less. 17.5% If you do not qualify for the 10.5% rate but in one of the last two income years: your taxable income * was $48,000 or less; and the sum of your taxable income * and income from all your PIE investments after subtracting any loss from your PIE investments was $70,000 or less. 28% If you do not meet the requirements for the 10.5% or 17.5% rates. Non New Zealand Tax Resident Individuals 28% If you are not a New Zealand resident for tax purposes. If you do not provide a PIR and/or your IRD number to us, we will apply a PIR of 28%. *Taxable income generally includes income earned from foreign sources even if you were a non-resident when that income was earned. New residents can choose to exclude their non-resident foreign-sourced income if they reasonably expect their taxable income to be lower than their total income from the tax year before becoming a New Zealand resident. If you are a new resident who chooses not to include your non-resident foreign-sourced income to determine your PIR, then you will be responsible for paying tax on the income attributed to you. A credit is available for the tax paid by BNZ KiwiSaver on your behalf. Checking your PIR It is important that we always have your correct PIR because if: You provide us with a PIR that is too low, you will have to include the income attributed to you in your tax return and pay tax on this income at your personal tax rate. A tax credit will be available for any tax credits allocated to you and any tax paid by BNZ KiwiSaver on your behalf. Interest and penalties may also apply. You provide us with a PIR that is too high, too much tax may be paid on your share of income from BNZ KiwiSaver which can t be claimed back from Inland Revenue. If you notify us of a change to your PIR after the beginning of the tax year (1 April), your new PIR will apply to your share of taxable income (or losses) in BNZ KiwiSaver that has not already been taxed in that tax year. Inland Revenue may direct us to apply a different PIR to the PIR notified by you, and we are required to comply /

62 Do you need help working out your PIR? Are you a New Zealand tax resident? No Your PIR is 28% Yes In either of the last two income years was: and Your taxable income $14,000 or less? Your taxable income plus income from all your PIE investments after subtracting any loss from your PIE investments $48,000 or less? Yes Your PIR is 10.5% No In either of the last two income years was: and Your taxable income $48,000 or less? Yes Your PIR is 17.5% Your taxable income plus income from all your PIE investments after subtracting any loss from your PIE Investments $70,000 or less? No Your PIR is 28% Member expenses Annual management fees are charged against each fund. These fees will be allocated to you via unit pricing based on your Unit holdings and are deductible in calculating the PIE tax liability attributable to you. In calculating the PIE tax liability attributable to you, we may deduct fees that are charged directly to you, such as the member fee. Tax on contributions Your contributions to BNZ KiwiSaver are made from your after tax pay, so no more tax is payable on those contributions. The Member Tax Credits are not taxable. Your employer is required to withhold employer's superannuation contribution tax ( ESCT ) from all contributions they make to BNZ KiwiSaver /

63 The current rates of ESCT as at the date of this Prospectus are: Total before-tax pay and before-tax employer contributions in the previous income year ESCT rate $0 to $16, % $16,801 to $57, % $57,601 to $84,000 30% $84,001 upwards 33% If your current employer did not employ you for all of the previous income year, the ESCT rate will be based on estimates of your expected before-tax pay and employer contributions for the current income year. For more information on ESCT please refer to Inland Revenue's website at Tax on withdrawals, fund changes and transfers Whenever a withdrawal transaction occurs in your KiwiSaver account (including switching some or all Units to a different fund) your tax balance will be adjusted proportionately. If your KiwiSaver account has a tax payable balance, a proportionate amount of Units will be deducted from your KiwiSaver account and the proceeds paid to Inland Revenue. If your KiwiSaver account has a tax receivable balance a proportionate amount of the tax receivable balance will be paid to your KiwiSaver account when you switch funds or transfer to another KiwiSaver scheme. A proportionate amount of any tax receivable balance will be added to any withdrawal amount paid to you. Tax reporting to you We will provide you with a tax certificate by 30 June each year, relating to the year ended 31 March. Our discretion There are restrictions on the percentage of Units that any one member and his or her associated parties can hold in BNZ KiwiSaver, because it is a PIE. We may reject contributions (other than those required under the KiwiSaver Act or tax credits payable in respect of a member) and requests to change your fund investment selection or switch Units between funds if this is likely to result in a breach of those PIE requirements Returns/Unit Prices Returns - key factors The key factor that determines returns is the investment performance of the fund or funds in which you invest, which is in turn determined by the asset allocation of that fund, the performance of any investment manager and underlying investment managers, the fund s investments and the investment markets generally /

64 Investment managers cannot control or guarantee the performance of investment markets, and investors should be aware that fluctuations (ups and downs) in the market value of investments made by the funds will be reflected in the changing values of the respective Unit Prices for the funds. This means that the Unit Price for each fund may rise or fall and the performance of the fund may vary. See Unit Prices below for more information. Other key factors that determine the returns you will get are: when you start contributing to BNZ KiwiSaver; fees and expenses charged; the amount contributed to BNZ KiwiSaver by you or on your behalf; taxes paid in respect of your investment, the funds and any benefits; and the basis on which and when you make withdrawals from BNZ KiwiSaver. We are legally liable for paying any returns from BNZ KiwiSaver to you. The amount of any returns payable to you cannot be quantified as at the date of this Prospectus. No amount of returns is promised to you. Unit Prices The value of the Units you hold in a fund is determined by the Unit Price in that fund. Each Unit represents a proportional interest in that fund s assets, so changes in the value of a fund s assets will result in changes in that fund s Unit Price. Currency movements may also affect the value of the assets of some funds. Unit Prices are updated each valuation day (generally each business day) and are available via Your return will be affected by the difference between the Unit Price at which a Unit was issued to you and the Unit Price at which you redeem it. We have processes in place to check the accuracy of Unit Prices. We may make adjustments to Unit Prices in accordance with current commercial practice or accounting standards or regulatory guidelines. Declared Unit Prices (including any resulting from such adjustments) are final. 17. MANAGER'S STATEMENT In the opinion of our directors, after due enquiry by them, neither: the value of BNZ KiwiSaver s assets relative to its liabilities (including contingent liabilities); nor the ability of BNZ KiwiSaver to pay its debts as they become due in the normal course of business, has materially and adversely changed during the period between the date of the financial statements referred to in this Prospectus and the date on which this Prospectus was delivered in registrable form to the Registrar of Financial Service Providers for registration /

65 18. KIWISAVER TRUSTEE'S STATEMENT /

66

67

68 DIRECTORY Trustee The New Zealand Guardian Trust Company Limited Contact Address of the Trustee* Level Queen Street Auckland 1010 Directors of the Trustee* Robin Albert Flannagan, Auckland James Earl Douglas, Auckland Andrew Howard Barnes, Auckland Timothy James Shaw, Auckland The directors of the Trustee can be contacted at the Trustee s address. Promoter Bank of New Zealand Directors of Promoter* (also Promoters) Mai Chen Prudence Mary Flacks Michaela Jane Healey Anthony John Healy Susan Carrel Macken Douglas Alexander McKay Stephen John Moir Andrew John Pearce Gavin Robin Slater Manager and Issuer BNZ Investment Services Limited Contact Address of Manager and Issuer* Level 4 80 Queen Street Auckland 1010 Postal address: BNZ Investment Services Limited Private Bag Auckland 1142 Telephone: From overseas: [email protected] Directors of Manager and Issuer* Jacqueline Maree Farman, Auckland Lee Alexandra Hatton, Sydney, Australia Richard Louis Morath, Sydney, Australia Christopher Harril Reid, Auckland Shelley Maree Ruha, Auckland The directors of the Manager and Issuer can be contacted at the Manager and Issuer's address. *Names and addresses are as at the date of this Prospectus and may change from time to time without prior notice to members. The current directors and addresses can be found on the Companies Office website at /

69 GLOSSARY Before-tax pay BNZ BNZ Authorised Financial Adviser Default Member ESCT Financial Reporting Act includes taxable salary/wages, bonuses, overtime pay, parental leave payments out of public money and ACC compensation for the purposes of employee contributions (but, for the purposes of employer contributions, excludes parental leave payments out of public money and ACC compensation), but excludes exempt income, accommodation benefits, redundancy payments, overseas living accommodation allowances and superannuation contributions made by your employer. means Bank of New Zealand. means an adviser who is authorised by the Financial Markets Authority to provide class and personalised financial adviser services under the Financial Advisers Act BNZ Authorised Financial Advisers Disclosure Statements are available on request and free of charge. means a member who was allocated to BNZ KiwiSaver by Inland Revenue (because BNZ KiwiSaver is a default KiwiSaver scheme) and who has not chosen a BNZ KiwiSaver Scheme fund. means employer s superannuation contribution tax. means the Financial Reporting Act FMS Act means the Financial Markets Supervisors Act Government kick-start contribution GST Income Tax Act Instrument of Appointment Issuer KiwiSaver Act KiwiSaver Scheme Rules Manager Member Tax Credit New Zealand Superannuation means the one-off contribution made by the Government that you may have received if you first became a KiwiSaver member prior to 2pm on 21 May means goods and services tax chargeable or levied in accordance with the Goods and Services Tax Act means the Income Tax Act 2007 and, as the context requires, the Tax Administration Act is the document that appoints us as a KiwiSaver default provider. means BNZ Investment Services Limited. means the KiwiSaver Act 2006, as amended from time to time. means the provisions implied in the Trust Deed by section 126 and Schedule 1 of the KiwiSaver Act. means BNZ Investment Services Limited, the manager of BNZ KiwiSaver. means a contribution from the Government calculated by reference to your contributions to BNZ KiwiSaver and/or a Complying Superannuation Fund. Further information is set out under the heading Member Tax Credit on page 31. means the entitlements defined under the New Zealand Superannuation and Retirement Income Act /

70 PIE means portfolio investment entity as defined in the Income Tax Act PIR means prescribed investor rate as defined under the Income Tax Act See pages 60 to 62 for more information. Promoters Prospectus Qualifying Age Relevant Requirements Russell Investments means BNZ and its directors. means this document, the BNZ KiwiSaver Scheme prospectus. means the date when you reach the age of eligibility for New Zealand Superannuation (currently age 65) and you have been a KiwiSaver member (and/or a member of a Complying Superannuation Fund) for at least five years. means the requirements of the KiwiSaver Act (including the KiwiSaver Scheme Rules), the Instrument of Appointment and any other relevant law, and any legally binding ruling, notice or approval given by the Financial Markets Authority, Inland Revenue or the Registrar of Financial Service Providers. means Russell Investment Group Limited. Securities Regulations means the Securities Regulations Trust Deed Trustee Unit Unit Price we you or I means the trust deed for BNZ KiwiSaver dated 8 January 2013 (and amended on 1 July 2014), and any Establishment Deed for any fund, as amended from time to time. means The New Zealand Guardian Trust Company Limited, as the trustee of BNZ KiwiSaver. means a unit in a fund. means the price for a Unit in a fund, calculated in accordance with the Trust Deed. Unit prices are based on the value of the underlying investments at the relevant time. means BNZ Investment Services Limited, the manager of BNZ KiwiSaver. Our and Us have corresponding meanings. means the member, being the person who signs up, or is allocated, to BNZ KiwiSaver or the person whose parents or legal guardians are signing up. Your has a corresponding meaning. All terms defined in the Trust Deed which are not separately defined in this Prospectus shall have the same meanings where used in this Prospectus, unless the context otherwise requires. Reference to legislation is a reference to that legislation as amended or substituted /

71 APPENDIX A. SUMMARY FINANCIAL STATEMENTS BNZ KiwiSaver Scheme Summary Financial Statements For the Year Ended 31 March /

72 BNZ KiwiSaver Scheme Summary Statement of Changes in Net Assets Available for Benefits For the year ended 31 March 2015 BNZ KiwiSaver Scheme BNZ KiwiSaver Scheme Dollars in thousands Investment income Interest income Dividends and distribution income Net gain/(loss) on financial instruments at fair value through profit or loss Year ended 31/03/15 15 month period ended 31/03/ ,211 4,623 8,741 3,843 Net investment income 39,283 8,661 Expenses Management fees Management fee rebates 2, (1,540) (490) Total expenses 1, Profit attributable to Members 37,926 8,215 Membership activities Opening net assets available for benefits 237,654 - Contributions Member contributions 63,181 27,683 Employer contributions 35,852 15,015 Crown contributions 15,045 12,712 Transfers in from other scheme providers 157, ,061 Member tax credits 12,409 2,958 Switches in from other BNZ KiwiSaver Scheme Funds 9,168 3,872 Total contributions in the Scheme Benefits paid Transfers out to other scheme providers Retirement Death and disability First home Hardship Switches within BNZ KiwiSaver Scheme Funds Other permitted withdrawals Total benefits paid from the Scheme Other member movements Members' administration fee Members' PIE tax Net benefits accrued to Members 293, ,301 (16,980) (3,762) (2,405) (525) (460) (128) (5,827) (2,286) (1,060) (485) (9,168) (3,872) (331) (529) (36,231) (11,587) (1,258) (580) (4,294) (695) 289, ,654 Closing net assets available for benefits 527, ,654 Units on issue (Units in thousands) Balance at the beginning of the period 225,514 - Contributions - units 265, ,051 Withdrawals - units (37,707) (12,537) Balance at the end of the period 453, , /

73 BNZ KiwiSaver Scheme Summary Statement of Net Assets Available for Benefits As at 31 March 2015 Total BNZ KiwiSaver Scheme Total BNZ KiwiSaver Scheme Dollars in thousands As at 31/03/15 As at 31/03/14 Current assets Cash and cash equivalents 142,426 2,945 Financial assets at fair value through profit or loss 386, ,387 Contributions receivable 3,415 2,307 Other receivables 63 5 Management fee rebate receivable Total assets 532, ,730 Current liabilities Management fees payable Redemptions payable PIE tax payable on behalf of Members 4, Total liabilities (excluding net assets attributable to Members) 5,081 1,076 Net assets available for benefits 527, ,654 Represented by: Net assets attributable to Members 527, , /

74 BNZ KiwiSaver Scheme Summary Cash Flow Statement For the year ended 31 March 2015 BNZ KiwiSaver Scheme BNZ KiwiSaver Scheme Dollars in thousands Year ended 31/03/15 15 month period ended 31/03/14 Cash flows to/from operating activities Cash was provided from: Proceeds from sale of financial instruments at fair value through profit or loss Interest income Cash was applied to: Purchase of financial instruments at fair value through profit or loss Operating expenses 151, (264,035) (224,926) (2,468) (380) Net cash inflow/(outflow) from operating activities (114,838) (225,111) Cash flows from financing activities Cash was provided from: Contributions Cash was applied to: Benefits paid Members' PIE tax Net cash inflow from financing activities 292, ,994 (37,109) (11,926) (865) (12) 254, ,056 Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 139,481 2,945 2, ,426 2, /

75 BNZ KiwiSaver Scheme Notes to the Summary Financial Statements For the year ended 31/03/15 Notes to the Summary Financial Statements These Summary Financial Statements are for the BNZ KiwiSaver Scheme (the 'Scheme') which comprises the following five funds (together the 'Funds' and individually 'the Fund'): * Cash Fund * Conservative Fund * Moderate Fund * Balanced Fund * Growth Fund The Scheme was established and is governed by a Trust Deed between BNZ Investment Services Limited and the New Zealand Guardian Trust Company Limited, dated 8 January The Scheme was registered under the KiwiSaver Act 2006 on 16 January The Scheme began accepting Members on 11 February The Summary Financial Statements are presented in New Zealand dollars which is the Scheme's functional and presentation currency. All values are rounded to the nearest thousand dollars. The Summary Financial Statements have been extracted from the audited full Financial Statements which were authorised for issue by the directors of the Manager on 17 July 2015 and audited by Ernst & Young who issued an unqualified opinion on 17 July The Full Financial Statements from which these Summary Financial Statements have been extracted, have been prepared in accordance with the requirements of the Financial Reporting Act 2013, the Trust Deed, and Generally Accepted Accounting Practice in New Zealand ("NZ GAAP"). The Full Financial Statements comply with New Zealand equivalents to International Financial Reporting Standards ("NZ IFRS"), and other applicable Financial Reporting Standards, as appropriate for profit-oriented entities. The Full Financial Statements also comply with International Financial Reporting Standards ("IFRS"). The significant accounting policies applied in the preparation of the Full Financial Statements are as set out in Note 2 of the Full Financial Statements for the year ended 31 March There have been no changes to accounting policies and these policies have been consistently applied throughout the period presented. The auditor's report for these Full Financial Statements did not contain any explanatory paragraphs that highlighted matters that are regarded as relevant to a proper understanding of the basis of the opinion. The Summary Financial Statements have been prepared in accordance with FRS 43: Summary Financial Statements subject to the Securities Regulations The Summary Financial Statements do not include all the disclosures provided in the Full Financial Statements. The Summary Financial Statements cannot be expected to provide as complete an understanding as provided by the Full Financial Statements. The Full Financial Statements and other documents of, or relating to the Scheme, are filed on a public register at the Companies Office of the Ministry of Business Innovation and Employment and are available for public inspection (at under "Search other registers"). A member has the right to receive, on request, a copy of the most recent Financial Statements, auditors report, an estimate of the members benefits, or a copy of the most recent registered prospectus relating to the Scheme. These can be obtained at no cost by contacting BNZ at The most recent Full Financial Statements are also available on The Summary Financial Statements have been authorised for issue by the directors of the Manager on 17 July /

76 BNZ KiwiSaver Scheme Notes to the Summary Financial Statements For the year ended 31/03/15 Related parties BNZ Investment Services Limited (the "Manager") is the Manager and Issuer of the Scheme. The Manager is a wholly owned subsidiary of Bank of New Zealand ("BNZ") incorporated in New Zealand, who in turn is wholly owned by National Australia Bank Limited, a licensed bank in Australia. Management fees are a related party expense paid to the Manager and are shown in the Statement of Changes in Net Assets Available under "Management fees". Where the Funds have invested into other funds, the management fees and other in-fund costs charged to those funds are rebated and are shown under "Management fee rebates" in the Statement of Changes in Net Assets. Management fee rebates are mainly settled by the allocation of additional units in the underlying investments. Management fees payable and management fee rebates receivable are shown in the Statement of Net Assets. The Manager incurs the ordinary administrative expenses of the Scheme which it pays from the management fee it receives from the Scheme. The Manager also incurs the costs in relation to the audit and trustee fees of the Scheme. The New Zealand Guardian Trust Company Limited is the trustee of the Scheme. Each Fund operates bank accounts with the BNZ on normal commercial terms. Investments held with related parties at balance date: Dollars in Thousands As at 31/03/15 As at 31/03/14 Investments held with related parties at balance date: BNZ Cash PIE BNZ Bank Account - 57, ,426 2,945 Total 142,426 60,512 Dollars in Thousands Year ended 31/03/15 15 month period ended 31/03/14 Income earned from investments with related parties was: BNZ Cash PIE BNZ Bank Account 3, Total 3,660 1,167 Events occurring after the balance sheet date No significant events have occurred since the balance date which would impact the financial position of the Funds disclosed in the balance sheet as at 31 March 2015 or on the results and cashflows of the Funds for the year ended on that date /

77 APPENDIX B. AUDITOR S REPORT - SUMMARY FINANCIAL STATEMENTS /